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The economic tragedy of Marikana

To say the least, platinum mines are struggling.

The sharp-bladed spears, the pangas, the sticks, the hand guns, the war songs, the lies and hypocrisy, you name it – is all that will go down as the tragedy of Marikana.

Enter the police shootings and people die like flies.

Then lies and hypocrisy start – because South Africans can be so dishonest sometimes.

The death of one person is a death too many. My condolences go to all the bereaving families.

But why is everyone not willing to tell the truth?

Those hundreds of miners, armed to the teeth, went up that hill. As if that was not enough, they killed ten people – two policemen, two security guards and six civilians. These human beings were murdered like pigs by these miners camping on that hill.

The ten people – did they deserve to die like that because these miners had differences with Lonmin management over wage increases?

The ten people – did they not have families to fend for and children to raise? Did they deserve to die like that because someone wanted his salary doubled?

Why did they have to murder people like that? And when that fateful, unfortunate day came, which saw cops gun down 34 of these armed miners, all hell broke loose with hypocrisy.

What is the South African public telling us? The lives of the ten who were killed by miners were worthless compared with those of 34 killed by the police?

Why is the South African public not willing to start their argument from there?

Why would any group of people armed like that take to the hill and killed other people like that? Do we not have laws in this country? Do we not have the Labour Relations Act, which is a handy platform through which to address issues of worker and salary disputes?

Which country in the world, democratic or dictatorship, will allow ten murders to go unpunished? Tell me you damn hypocrites?

Try and kill a cop in the United States and see what will happen to you. Try and kill a cop in Great Britain and see what will happen to you. You will taste the full might of the law.

These miners were misled.

But again, the tragedy is that these workers are most unlikely to get the R12 500 they are demanding. And this, in a nutshell my friends, will have been an exercise in futility.

I hold no brief for Lonmin or any other mine. But the practical reality is that all of this is going to end very badly.

This is not1999, 2002, 2006 and 2008 when platinum was the most profitable business in the world. The good times are gone. The industry has been struggling since the global recession in 2009, which saw platinum mines’ real return on capital drop well below the cost of capital due to, among other things, increasing labour costs and shrinking platinum prices.

The fact of the matter is platinum mines are not producing sufficient returns to satisfy shareholders, let alone double salaries overnight for its workforce. This is just the economic reality. It’s not politics. The striking miners and their unions (those who still have unions) must consider what is realistically possible.

With the Marikana as persistent as it is, it looks very gloomy for Lonmin. The workers and the trade unions would be well advised to hold on to their jobs and work the system from within going forward.

The company has already warned it is in danger of breaching debt covenants and has said it may need to raise equity with some analysts saying it might need some $1.25 bn in new capital. Lonmin had been struggling under pressure of weakness in the platinum price, which is down by a third from its 2008 record high. The company’s balance sheet is not looking great either.

Think about it.

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