Lonmin concessions and AngloGold closure heighten contagion concerns

The closure of AngloGold Ashanti's (NYSE:AU) nation-wide operations and Lonmin's concessions to striking workers (LSX:LMI) in South Africa have raised concerns that troubling precedents are being set for future industrial unrest.

Strikers in South Africa managed to halt the nation-wide operations of AngloGold Ashanti, the world's third largest gold producer last week, with 35,000 employees throughout the country taking part in the industrial action.

The level of worker unrest compelled the gold miner to halt operations in a country which provides it with 32% of its global output.

The Economist reports
that despite recent signs of easing tensions in South Africa's strike-riddled resources sector, the AngloGold closure as well as concessions by platinum giant Lonmin to strikers have heightened fears of contagion and the increased likelihood of worker militarism in future.

Lonmin recently ended a deadly and protracted dispute workers at its Marikana mine by providing pay rises of between 11% and 22%, as well as one-off bonuses of 2,000 rand. The industrial action lasted for six weeks and left 46 people dead in its wake.

Many are now concerned that the precedents set by Lonmin and AngloGold could lead other miners to conclude that extreme action is their only effective means of extracting concessions from employers, and have heightened concerns of strike contagion.

The consequences for South Africa's economy could be devastating, with President Jacob Zuma stating that the recent spate of strikes in the country's platinum and gold mines have cost the country 4.5 billion Rand.


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