South Africa?s mining industry is again confronted by labour unrest.?Production at the Marikana platinum mining complex run by Lonmin PLC, the world?s third largest platinum producer, has been halted since August 10 by 3,000 striking rock drillers demanding higher wages.

The dispute at the huge platinum production centre at Rustenburg, north of Johannesburg, became violent when rival trade unions clashed with police and one another.

Sporadic fighting between the Association of Mineworkers and Construction Union (AMCU) and the larger National Union of Mineworkers, a key supporter of the ruling African National Congress, has resulted in 10 dead, including two policemen.

The AMCU, which is widely seen as the more radical union, has accused the NUM of ?sleeping in one bed? with the mine?s management.

The battle to win members at Rustenburg and other mines a is an increasing threat to production.

It is also highly politicised, given the NUM?s ANC links. The union, formed 30 years ago, has over 300,000 members, while the AMCU, formed more recently in 1998 is reported to have around 50,000, but has been winning membership in major platinum mines.

One South African analyst speaking off the record to beyondbrics explained,??many workers feel the NUM has forgotten its role as a people?s union and is primarily motivated by politics?.

?They have been caught on the back foot by AMCU, who have?successfully targeted rockdrill operators ? the key productive worker in platinum production who can bring mines to their knees.?

Despite unemployment levels of 25 per cent, South African rock drill operators are in high demand and able to press for higher wages.

?It?s highly physical, dangerous work, and they are a scarce resource. To get a young South African with a matric [school-leaving certificate] to sit underground and pound a rock is difficult. So drillers tend to come from Mozambique and Swaziland ? they don?t care about the ANC.?

Lonmin have struggled in the past with labour unrest at Marikana, notably?in May 2011, when it sacked 9,000 workers following a strike. However, it?is not the only company to suffer from the union?s feuding.

In February this year, AMCU-NUM clashes during a strike at Impala Platinum Holdings, the world?s largest platinum miner, at its Rustenburg site, lead to four deaths and a six-week closure.

the latest developments put further pressure on Lonmin, which already had its shares on a downward trend. During Tuesday?s trading its share price fell over four percent and slipped a further 1.9 per cent on Wednesday.

In July, Lonmin announced it was cutting 2012 capital spending plans by $20m to $430m, blaming low demand. The company plans to expand annual production to 950,000 ounces by 2015, but its 2013 target has been revised to the same level as 2012 at 750,000 ounces.

It has been a difficult year for platinum producers in general, with prices falling sharply in recent months,?reaching?the lowest point relative to gold since the 1980s.

Compounding?this are the rising extraction costs at South Africa?s platinum mines, which hold 80 per cent of the world?s total reserves.?As the FT reports, while labour makes up the bulk of the costs, electricity expenses have been rising at 25 per cent annually for the past three years. The slowdown in the European motor industry, which is sitting on large platinum surpluses, has dented revenues for all the major industry players and created serious problem with over-capacity.

Another mining analyst speaking to beyondbrics off the record said,

?The South African platinum miners are in a catch 22 situation: producers need to cut production at higher cost shafts to raise their profitability, but they?re?conscious?of the threat posed by AMCU.?

?NUM understands that to maintain jobs for their other members they have to close the expensive shafts. But this is where AMCU organises.

?What?s needed is a higher market price for platinum, but the big producers are saying it will take 6-18 months for surpluses to clear. There are going to be some tough calls ahead for South African platinum miners.?

Lonmin is attempting to restore production with police assistance and a threat to fire absent employees. However, the company?admitted on Wednesday that workforce?turnout was ?still very low?.

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