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Women protest against the police near the scene of the shooting at the Lonmin mine on Friday, Aug. 17, 2012. (THEMBA HADEBE/AP)
Women protest against the police near the scene of the shooting at the Lonmin mine on Friday, Aug. 17, 2012. (THEMBA HADEBE/AP)

Analysts fear reaction in other mining regions after South African killings Add to ...

The eruption of violent protests at Lonmin PLC’s Marikana mine, and the brutal police response, are a blow to South Africa’s beleaguered mining industry, compounding the country’s reputation in the sector as a difficult and economically undesirable place to operate.

Analysts at Citigroup Inc. voiced fears, privately expressed by industry executives, that the deaths in Rustenburg could spark a reaction elsewhere in South Africa’s mining regions.

“The rise of the more militant AMCU union over the ANC-friendly NUM union is worrying in that recent events may just be the tip of the iceberg in terms of mining-worker dissatisfaction and general social dissatisfaction,” they said on Friday.

The platinum industry has not tended to provide the comfortable living conditions typical of the gold sector, they added, with workers often bussed in from nearby villages rather than accommodated on site.

The Association of Mineworkers and Construction Union (AMCU) has had particular success in winning converts in the platinum sector, said industry experts, helped by the concentrated geographical proximity of the platinum mines and the lower average penetration of the NUM, at about 60 per cent.

Andrew Levy, labour relations and labour law consultant, said he believed that the circumstances that had lead to the flare-up at Marikana were isolated. “Bargaining patterns in other industries are reasonably well established,” he said, pointing to the gold sector.

Other industry figures lamented the latest blow to the mining industry’s reputation in South Africa and the continued uncertainty around mining policy and labour relations.

A long-running debate within the African National Congress (ANC) about potential nationalization of mining assets has yet to be resolved, with a conference scheduled for December.

Some – including Mr. Levy – believe the government is back-tracking on proposals to amend South Africa’s labour laws, requiring unions to ballot members before strike action and holding them liable for illegal actions.

Mark Bristow, chief executive of Randgold Resources Ltd., said mixed messages from the government regarding the mining industry had compounded the frustration on the ground.

“South Africa has never got to a formula where everyone feels part of the business,” said Mr. Bristow. “It is always them and us.”

“There is still a nationalization debate....the whole South African issue is still looking at distribution and redistribution rather than looking at the hard business of building value and profitability.”

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