Monday, September 17, 2012

National Mine Strike In South Africa Likely To Continue

Executive Summary:
The national mine strike in South Africa is likely to expand. South African politician Julius Malema called for a national strike in all of the South Africa’s mines. Labor unrest in South African mines already halted the production at two platinum and gold mines. South Africa accounts for 80 percent of the metal’s global output and will likely result in dramatic price fluctuations.

Discussion:
Platinum rose almost 3 percent on Wednesday due to the supply fears after labor unrest halted production. South Africa’s economy was built on mining, and it remains an integral driver of growth. The mining sector employs about 500,000 people and it contributes between 5 percent and 8 percent of gross domestic product. Miner unrest is a central issue in South Africa since police shot and killed 34 striking miners and wounded 78 on August 16th at Lonmin PLC’s platinum mine at Marikana.

The South African miners’ strike is becoming increasingly volatile. Eight thousand striking miners marched to a hospital to see roughly 190 miners who claim to have been beaten and tortured in police custody. In Marikana, north west of Johannesburg, strikers are threatening to kill anyone who goes to work. A dead man at Marikana was found near a granite hill where strikers normally gather. This raises the toll from violence at Lonmin’s mine to 45, including 10 people killed in the days before the police shooting. Two police officers have been hacked to death by strikers with machetes. Two mine security guards were burned alive in their vehicle.

Lonmin is condemning the ongoing intimidation and threats to life and property. Only 3 percent of workers have shown up to work in the Lonmin mines. Lonmin’s production in South Africa has been halted for five weeks. Anglo American Platinum, the world’s largest producer of platinum metal, said it was suspending operations at five shafts in Rustenburg to protect the security of its 26,000 employees at the mines. Gold Fields has since been hit by two strikes, one erupting days after the other had been resolved. The strikes have halted platinum production in South Africa which accounts for 80 percent of world platinum production. The strikes have also substantially diminished the production in the country's largest gold mines. 

Julius Malema told striking miners that South Africa’s critically important mining industry should be stopped and force the removal of the leadership of the National Union of Mineworkers. Malema said, “There must be a national strike. They have been stealing this gold from you. Now it is your turn. You want your piece of gold. These people are making billions from these mines.” Malema was expelled from the ruling African National Congress earlier this year for showing disunity and failing to accept party discipline.

Mine workers are demanding higher wages. Many workers have rejected representation of the National Union of Mineworkers; the country’s biggest union and an ally of the ruling African National Congress. Lonmin has offered an increase far below the $1,522 USD a month the miners are demanding. On Sunday, they said they could not afford the miner’s demands.

Analytic Confidence:
Analytic confidence for this assessment is medium. Source reliability ranges from medium to high, but given the nature of the issue, it is difficult to maintain a firm understanding of what is taking place and the situation extremely fluid and dynamic. However, the sources do not conflict with each other indicating there is a general consensus on past events. The analysts had low expertise, worked separately and did not use structured analytic methodologies. The subject is moderately complex and the deadline was easy to meet.

Methods And Processes:
Using Google Documents, the authors shared a mutually accessible database of recent articles collected over the previous 72 hours. We independently used Google News searches to obtain articles from a variety of sources to corroborate the information available to us. Because information came from a large pool of sources and was not conflicting, the authors were able to establish that the reliability of the information was high.

After independently gathering and sharing articles on the topic, the authors met on Google Hangout and simultaneously edited the SFAR document. The edits included checking sources, providing links to sources and and proofing written material for correct usage of language and words of estimative probability. The collaborative nature of Google Hangout and Google Documents was critical to accomplishing the task of writing a joint SFAR, and allowed for maximum flexibility and minimized time lost.

Authors:
Author: Irena Lazarevic: lazarevic.irena@gmail.com

Author: Karl A. Gustafson: gustafsonkarl@gmail.com


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