“Welcome back,” said the sign at the end of the strike. This bitter dispute ended with smiles and handshakes under Christmas lights at the mine gate.
On June 25, across the platinum belt near Rustenburg in the North West province of South Africa, 120 kilometers north of Johannesburg, around 70,000 miners went back to work. The Association of Mineworkers and Construction Union (Amcu) reached a wage settlement the day before with platinum producers Lonmin, Implats and Angloplats.
“It is our sincere hope that our companies, our industry, our employees and all stakeholders will never again have to endure the pain and suffering of this unprecedented strike period. None of us, nor the country as a whole, can afford repetition,” says Ben Magara, Lonmin CEO, after the union signed a three-year agreement.
At one of Lonmin’s mines in Marikana, hundreds of mineworkers walked in darkness to clock in. Their supervisors and bosses formed a guard of honor to welcome them back. But production was far away in the first weeks of the return. Miners were inducted and went through health checks before setting foot in the shafts.
“Previously, mining companies just put their workers back to work straight away. That’s not Lonmin, we are not here for the quick and short term solutions. We’re for a sustainable business with the interest of the person at heart,” says Mark Munroe, Lonmin’s mining division and safety head.
Lonmin says it could be six months before full production is reached.
Munroe says from the beginning of the strike, Lonmin invested in mine maintenance to protect the shafts from damage and keep ventilation working. Engineers have also been hard at work managing water underground.
“We shut down with the cognisance it will go on for a long while. In fact, we put extra mine support in place. We put plans in certain configurations so that we wouldn’t need so much maintenance and check-ins. All the water was stored,” says Munroe.
The separate agreements reached with each company are effective from July 1, 2013 for Amplats and Implats and Lonmin on October 1, and will run until June 2016. Employees with basic salaries less than $1,126 a month will receive a $94 increase over three years.
“This victory ushered a paradigm shift in the entire mining sector. This also shifts the media mindset that our demands were ridiculous,” says Amcu president, Joseph Mathunjwa, after signing the agreement.
Mathunjwa says they have established a task team that will look at worker share ownership. This means miners could own part of the mines they closed for five months.
Former Anglo American strategist, Clem Sunter, supports this.
Sunter says Kumba Iron Ore, a subsidiary of Anglo American, has an employee share ownership scheme which since December 2011 paid out gross dividends to employees of more than $56,000.
“The shares won’t stop strikes but they will reduce the odds that they will go on strike for a long time. It is a step towards a more inclusive economy,” he says.
“The worker shareholder scheme is a very good idea that needs to be encouraged because it could change their lives for the better. It will give workers a meaningful stake from the company revenue,” says Andrew Levy, a labor economist and consultant at Andrew Levy Employment.
Levy says if the workers wishes are granted, it will be prudent to familiarize them with economic literacy to understand the share price of their companies.
“Workers will think carefully about going on strike because they are directly benefitting in the economy,” he says.
The mine owners hope so.

Painful And Costly Strike Ends With Glee And Hope

When you talk to Ben Magara, the fifth child in a family of nine children from rural Zimbabwe, you can’t help but think that the open and friendly person smiling at you may be just too nice to be taking on a tough and thankless job.
Magara takes up the role as CEO of the world’s third-largest platinum miner, Lonmin, on July 1, and a rocky road lies ahead.
Worker relations at Lonmin and across the South African platinum sector are a bubbling cauldron. On June 3, a National Union of Mineworkers (NUM) official working at Lonmin’s Western Platinum operation, 120km north west of Johannesburg was shot dead. It led to talk of a peacekeeping force for the mines, which would have been unthinkable just two years ago.
It is a sign of troubled times. There was mistrust even before the Marikana tragedy in August. Between August 11 and 16, clashes between police and striking workers led to the deaths of 44 miners. More than 70 people were injured and around 250 people were arrested.
A public inquiry into the deaths and the reasons why the strike had been so violent will continue this month. It will also ascertain why police, security guards and miners, who did not strike, were killed. The hearings are slow and findings may only emerge next year.
What seems clear from the inquiry, so far, is that a breakdown in NUM leadership and failure by unions to direct their members, may have contributed to the massacre. Government, police and mining companies are also likely to shoulder the blame.
Since August, the unpredictable South African mining industry has been plagued by wildcat strikes. At Lonmin, the majority of the unionized workforce belongs to the Associated Mineworkers and Construction Union (AMCU), around 70%, according to management. AMCU has been around for some time, but last year came to the fore as a rival to NUM, which is accused of being out of touch with its members. At the platinum sectors two other major employers, Impala Platinum and Anglo American Platinum (Amplats), AMCU members also make up the majority of unionized employees, leaving NUM on the back foot.
This has made South Africa’s platinum mines a political battleground as NUM struggles to regain its power base. There is much on the line for both unions and the ANC. To a degree, the platinum sector wage talks that will be held in July will be as much about the politics of the country as they will be about miners looking for wage increases.
In May, Lonmin caught  up on lost production after last year’s violence, but lost even more production as infighting between NUM and AMCU supporters led to strikes. The company’s share price has fallen 33% year-on-year on the London Stock Exchange, where the company has its main listing.
“We have to make sure the assets are working optimally. We will be rising from a low base and need to keep the cash flow running,” says Magara.
Forty-six-year-old Magara is just as imposing now as when he was elevated to CEO of Anglo Coal South Africa seven years ago. He rises at 4AM to go to the gym and appears to have lost none of his verve and enthusiasm.
We meet at the Melrose Arch hotel, in Johannesburg. Magara is keen to talk about his hopes for Lonmin and the South African mining industry.
Magara says that the mining industry has to work together in communities around mines. And referring to a long running area of contention between miners and companies, he says the industry cannot merely apologize for silicosis. The debilitating lung disease can cause premature deaths. It is caused by crystalline silica dust inhaled by miners with inadequate protection. Today, the protection has improved and many of those suffering from the disease contracted it years ago. South African mining companies have been shying away from paying decent compensation to miners who contracted the disease.
“We have to deal with it,” he says.
Magara, who has a mining engineering degree from the University of Zimbabwe, acknowledges he will have his work cut out at Lonmin. His last job was executive head of engineering and capital projects at Amplats. He clearly knows the platinum business; while his job at Amplats was an executive one, at Lonmin the buck will stop with him.
Heads of resources companies in the 21st century need broad skills, it is no longer just about getting the ounces out of the ground, it also requires political poise.
“Everyone wants to have skin in the game,” says Magara.
He is a good communicator and as the quote above suggests he gives the impression that he is unlikely to be an immoveable object when it comes to negotiations. He knows his ability to communicate is a key attribute. Asked why he was selected as the person for the Lonmin job, he says much of his work at Amplats involved community relations. He had to help the company secure mining licenses.
At Amplats’ Mogalakwena mine, near Polokwane, two communities had to be relocated, often an uneasy task. When Magara took up his position with the company, the people were refusing to move. He went to the communities each week, meeting with 17 sub-committees to discuss their grievances.
“In six months we had the licence,” he says.
It is Magara’s view that on occasions mining companies may be too quick to revert to the law.
“Actually, it is about building relationships. It’s about respect,” he says.
Magara has always been close to the ground and early to rise. Back home, in Bikita, Masvingo, he would rise at 4AM to tend vegetables with his siblings and father, before heading off to school. In those days, Magara dreamed of being a bus driver.
Now as head of Lonmin, Magara steers a company with a market capitalization of $1.97 billion, albeit carrying significant debt, where he has to unite the divided. Already, as part of the South African Chamber of Mines collective bargaining process for wage talks in the gold and coal sector, NUM has tabled a demand of 60% for entry-level workers, with the overall demand about a 15% increase. Taking into account that unions aim high in wage negotiations, even an agreement to a fraction of these demands could prove ruinous. Wages make up half of mining costs.
Magara knows what he has to do with the operations at Lonmin.
“It’s all about efficiency… Lonmin has an excellent resource base,” he says.
That is just one aspect of what might be called the Lonmin success equation. If Magara steers the Lonmin bus onto the clear highway, he will have to have all the parties with “skin in the game” on board. Before he can settle into the driver’s seat, he will have to pull off quite a feat; an entente with labor that should lead to increased productivity and efficiencies.
Given the country’s history, NUM’s loss of footing and rivalry with AMCU, the trauma mining communities have suffered in the last year, it is a job that could drive an angel to drink.
Magara, though, as an African with significant experience in South Africa and Zimbabwe, some believe, is better equipped to negotiate this rough tough job than most.

A Rough Tough Job

The appointment of Ben Magara as CEO of Lonmin is the best decision made by the Lonmin board since they got rid of former CEO Brad Mills in September 2008. 
Mills, a self-confessed mechanization zealot, whose attempts to mechanize Lonmin’s mining operations were unsuccessful, stepped down by mutual consent and was soon followed by his chairman, John Craven, who retired in January 2009. 
Prior to this, Craven had famously declared Mills had the full support of himself and the Lonmin board for his policies. 
Mills was replaced by former chief financial officer Ian Farmer, who made major changes. He was making good headway when he resigned last year because of ill-health at precisely the same time the labor mayhem erupted at the group’s Marikana mine. 
Forty-six-year-old Magara is a highly-experienced mining engineer and, up until now, an Anglo American Corporation ‘lifer’. He worked for the group for 22 years, starting on the Wankie Colliery, now known as Hwange, in Zimbabwe, before coming to South Africa in 1994. 
He has occupied a string of top positions in Anglo’s coal division and is currently head of engineering and capital projects at Anglo American Platinum (Amplats). Magara will assume his position at Lonmin on July 1. 
The obvious question is: why is Magara leaving Anglo? You don’t have to look too far for the obvious answer. Sources indicate he was overlooked for the top position at Amplats, where last year Chris Griffith was appointed to replace former CEO Neville Nicolau. 
That’s the second time Magara has been overlooked for a top spot at Anglo, after being shifted into Amplats during a group management reshuffle in 2009, from his previous position as CEO of Anglo’s South African coal operations. 
Magara ticks all the boxes for the top position at Lonmin starting with his profession, because a criticism frequently voiced by analysts over mining company CEOs with a financial background, is that they don’t have the technical background to stop their mine managers pulling the wool over their eyes. 
But he also comes with plenty of experience in the areas that have been increasingly crucial to running a mining group in South Africa—black economic empowerment (BEE), safety and health issues and, arguably most important of all, dealing with politicians. 
In his position at Amplats Magara was responsible for bringing the group’s Unki platinum mine in Zimbabwe on stream. It was developed successfully and with little confrontation with the Zimbabwe government over indigenization. 
At Anglo Coal, Magara made his name running the New Denmark Colliery, where he introduced a new and highly successful safety program dubbed “Smarty”—an acronym for ‘safety must always relate to yourself’. He was also closely involved with the creation of Anglo Inyosi Coal—a BEE joint venture setting up a major domestic coal company, which holds the contract to supply the new Kusile power station being built by Eskom—South Africa’s national power supplier. 
Magara is also no stranger to crisis management, having been appointed head of the working group created to deal with the coal supply crisis early in 2008, when Eskom’s mismanagement of its coal stockpiles triggered a temporary shutdown of the South African power grid. 
He pulled no punches at the time declaring in an interview that: “Had Eskom placed orders for extra coal sooner, we could have done something about it sooner.” 
I singled out Magara in the 2010 edition of Rainmakers and Pot Stirrers: Your Guide to the 100 Most Influential People in SA’s Mining Industry as a man destined for bigger things. 
So I am not surprised to see him moving to the top slot at the world’s third largest platinum producer. He faces some huge challenges but I have no doubt he’s going to crack it

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Painful And Costly Strike Ends With Glee And Hope

A Rough Tough Job

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