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Investment after Marikana: it smells like the 1980s
Policemen survey the scene of Thursday's clash at the Marikana mine shortly after the shootings. Picture: MARTIN RHODES
WE'RE watching the fallout from the Marikana bloodbath very closely today. And already it's starting sound a lot like South Africa in the 1980s.
Even the pictures (like the one on the left here) look like they were taken in the days of the Groot Krokodil.
The share price of Lonmin, the world's third-largest platinum miner, has been hit again on Friday morning, opening 5.88% down at R78.80. For now, the rand is holding up, climbing 0.5% to reach R8.25 against the dollar shortly before 10am. It was at R12.96 to sterling.
The platinum price is up again — by 1.19% to $1,450/oz. The start of supply concerns perhaps? Lonmin has already warned it has lost about 300,000 tons of ore, or 15,000 platinum equivalent ounces, in six days of mine production because of the violence.
The long-term implications are much more profound, however.
Analysts are already warning the violence could spread to other mining sectors, hurt employment and scare away foreign investment.
Andrew Joannou, chief investment officer at Afena Capital, told markets reporter Roy Downing this morning: “When it starts getting attention in the international news, it will make offshore investors even more nervous, not just for Lonmin and the platinum industry as a whole, but they will worry about whether or not it could spread into the other sectors like gold.”
Chris Hart, chief economist at Investment Solutions, says: “The investor response would be to invest in platinum but (not) platinum mining shares. Companies won’t be able to attract capital for investment, which may contract the industry.”
The implication of Thursday's events on a koppie outside Rustenburg will be felt for a long time to come.
As our markets editor, Ron Derby, says in his column today, the shootings are likely to change the structure of labour relations forever. He makes the point that one of the underlying reasons for the strike and the subsequent clashes — and there appear to be many — is that the established National Union of Mineworkers (perhaps so preoccupied with its own internal, political machinations) took its eye off the ball. It allowed a vacuum to develop into which the rival Association of Mineworkers and Construction Union (Amcu) simply stepped.
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