Lonmin had sued the recognized unions who represent the Rock Drill Operators to have the strike declared illegal. The company obtained a court order on August 11, 2012 declaring the strike to be illegal and ordering the workers immediately back to work. The strike was illegal under the Labour Relations Act.  Importantly the order contained an ultimatum that if the workers had not returned to their positions by August 17, 2012 they would face dismissal. Because of the work stoppage it Lonmin would probably not meet its meets its mining projections and have a short fall of revenue. The violence occurred on the day before the workers were to be terminated for disobeying the court’s order.

After the shooting the families of the missing miners were upset that they could not learn anything about the fate of their loved ones. Relatives were angry that the authorities had not produced a list of the dead.  Further compounding the problem was the lack of information about those injured and arrested. A police spokesman said that officers were using the mines database to contact family members but that the process was slow going. He asked the family members for patience.

Before the events of the 17th many observers had predicted that it was only a matter of time before there was a flare up of more violence with a corresponding increase in lost of life. The beginning of August saw 10 people lose their lives due to labor unrest at the mine. Two police officers had been attacked and killed. The security forces lost two of its officers who had been buried alive in their vehicle. This level of violence suggested that tensions were high and could ignite greater violence.

There does not appear to be much disagreement as to the sequences of events that led up the shootings of the 17^th of August. Reports from the mine are consistent in indicating that the security forces had conducted exhaustive negotiations with the miners in an effort to persuade them disarm. After three days of unsuccessful negotiations the security forces started to erect barbed-wired fencing to corral the armed miners and relieve them of their weapons. It is universally reported that some of the workers rushed the police line, firing as they advance. The police opened fire on the charging men and killed almost 40 of them and injured scores others. On August 17 the police were heavily armed and backed up by helicopters and armored vehicles.

I do not understand the need for some of the miners to arms themselves. It is possible that these workers choose to carry weapons for self-protection or intimidation of unsympathetic striking miners. The presence of armed miners had to have made the police even more nervous. It would have been a better strategy for the miners if none of their members were armed. Arming the miners gave the impression that they were expecting or were going to cause a confrontation.  In the aftermath of the shooting there were charges and cross-charges of who was to blame for the violent confrontation. The police chief claimed that his officers used violence as a last resort and only to protect themselves. This claim was supported by many of the striking workers.

Lonmin company officials expressed their condolences for the lost of life. A company spokesman indicated that the company would take care of the families and make sure that the children of the dead miners received a proper education. Management urged the workers to return  to work because the work stoppage would cause the company to miss its production quotas. After the violence at the mine the company’s stock tumbled to a nine year low. The price of platinum rose to a six week high due to uncertainty of supply because of the continued labor problems in SA. Clearly a prolonged shut down of mining operations would have a serious impact on Lonmin’s long term health.

The use of the deadly force by the police and security forces has brought memories of the massacres that occurred in the past under apartheid. At that time the world saw the white oppressive SA government killing black citizens who were only trying to improve their lives. Today apartheid has been completely dismantled. The Marikana mine violence was undertaken by the black African National Congress party’s government led by President Jacob Zuma. This fact has caused most South Africans to denounce the shootings and to question the government’s legitimacy. Perhaps the police acted properly in opening firing on the demonstrators.  I believe that on balance they handled the entire matter in a professional matter. It has been reported that some of the miners had practiced magic to protect them from the bullets. Their magic failed and they were killed where they stood.

Yet the usage of deadly force came at a steep political and economic price for SA and Lonmin. The violent confrontation cast a dark shadow on the country’s economy. The country is in danger of losing its reputation as a stable investment destination. At the time of the violence the industry was confronted by a lackluster platinum price due to slowdown in car manufacturing. Also mining at deeper depths, declining grades of ore and more complicated metallurgy has affected costs and profitability at the Lonmin. Needless-to-say as goes the auto industry so goes the demand for platinum.

Recently the mining industry has suffered numerous illegal strikes and workplace violence. These disruptions affect all South Africans, even those not directly involved in mining. Because of the industry’s labor problems many investment advisers are warning clients about investing SA platinum. Bloomberg News  reported that after the violence at the mine platinum prices rose to a six week high. At the same time Lonmin shares continue their downward trend.

About ten days prior to the August 17^th confrontation the miners had gone out on strike because of an alleged pay dispute. The workers, albeit not all of them, were demanding that the salaries be tripled. In essence the workers who were making on average of about $484-$605 and sought a pay rise to $1,512. Lonmin management and even some union officials considered this demand outrageous. The striking miners had to have known that the company would never agree to this demand even if it could afford the increase in salaries. As part of its coverage of this incident, the Wall Street Journal in one of its pieces pointed out that SA’s labor costs were already a hurdle to wooing investment in both mining and manufacturing. Comparatively speaking SA wages are higher and hiring practices less flexible than virtually anywhere else in Africa as well as in Asia and South America.