The violence at Lonmin’s (LON) Marikana mine in the North West could scare away foreign investment‚ economists warn.
Analysts believe the violence could spread to other mining sectors and hurt employment‚ when nearly a quarter of the country’s work force is unemployed.
On Thursday evening‚ South African Police Service (SAPS) officers opened fire on a group of strikers that had illegally gathered on a nearby hill‚ killing more than 30 strikers‚ according to the South African Press Association.
Andrew Joannou‚ chief investment officer at Afena Capital‚ said foreign investors could become nervous when looking for investments in SA.
“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‚” Joannou said.
“We haven’t seen it yet‚ but it could happen. With the rand platinum group metals basket price so low‚ any additional production cuts or cost increases will have a significant impact‚” he said.
Chris Hart‚ chief economist at Investment Solutions‚ said the situation at Lonmin could be damaging to investment and the employment sector.
“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‚” Hart said.
He said the responsibility rested with the leadership of unions.
“This is about leadership and unions trying to gain prominence and make a name for themselves. Unions can make demands on behalf of labour but if those demands can’t be met then it is simply political grandstanding‚” he said.
Hart said this could be damaging to workers as well as the unemployed‚ as such violence could deter investments that could create jobs. - I-Net Bridge