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Lonmin withdraws threat to fire strikers

Story highlights

  • Lonmin ends threat to fire striking workers who failed to return to work by Tuesday
  • Clashes at its South African platinum mine this month have left 44 people dead
  • Unrest began as dispute over pay, complicated by union rivalries
  • Lonmin's shares shed 19% between initial clashes and close of trading on Monday
Lonmin has backed down on its threat to fire striking workers who failed to return to work by Tuesday after clashes at its South African platinum mine that left 44 people dead.
As a minority of miners began to return to their posts, the London-listed company dropped its ultimatum to workers as it struggled to cope with the political fallout from the violence and a halt in production that has prompted speculation it will need to raise fresh capital.
Mark Munroe, executive vice-president for mining at the world's third-biggest platinum producer, was quoted as telling local radio on Tuesday: "A deadline or ultimatum is not helping anyone. We strongly encourage people to come to work as soon as possible. There is a lot of action you can take before you dismiss someone."
In one of the bloodiest scenes since the end of apartheid nearly two decades ago, at least 34 people were killed and dozens more wounded when police opened fire on striking miners at Lonmin's Marikana mine last Thursday. Clashes the previous week near the mine cost the lives of 10 people, including two police officers.
The unrest began as a dispute over pay, complicated by union rivalries. Falling demand from carmakers that use the metal have led miners of platinum -- the world's most plentiful stocks of which lie under South Africa's northern plains -- to seek to cut costs.
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Jacob Zuma, South Africa's president, has ordered an inquiry into the violence and declared a week of national mourning after the outbreak of unrest in a sector that has long stirred political passions.
One in five of the 3,000 drill operators who staged the strike -- which has been declared illegal -- showed up for work on Tuesday, the company said, bringing overall attendance to 33 per cent of the mine's 28,000-strong workforce, slightly more than on Monday.
Lonmin's shares shed 19 per cent between the initial clashes and the close of trading on Monday. They climbed 2.4 per cent to £6.25 by late morning on Tuesday as analysts eyed a possible rights issue to counter the risk that the company would breach its debt conditions.
The company has yet to say how much production has been affected by the strike. Analysts at Deutsche Bank estimated the unrest would reduce Lonmin's output by 50,000 ounces -- equivalent to three weeks' production, or 7 per cent of the 721,000 ounces Lonmin sold last year.
Deutsche Bank said Lonmin's options to raise capital -- including closing high-cost shafts and a merger -- "are either difficult to achieve or fall short of solving the problem, making a rights issue more likely".