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EMPLOYEES at Lihir Gold Limited (LGL)
returned to work last Friday morning, according to the general manager
for corporate affairs Joe Dowling.
Mr Dowling in a press statement last Friday said the workers agreed to
return to work following the completion of customary and formal
formalities.
“Mining has resumed and the process plant will be brought back to
production over the next 36 hours,” Mr Dowling said.
With the week’s closure of the mine, LGL last Thursday put its losses at
US$10.98 million (K32 million).
Vice-Minister for Mining Ano Pala congratulated the LGL management and
mine workers on their return to work and the reopening of the mine after
a week-long stop work meeting.
Mr Pala travelled to Lihir last week with the Mineral Resources
Authority managing director and a team from the Labour Department to
help resolve the dispute.
Researchers for Lihir Gold investors, Credit Suisse Equities
(Australia), in their latest report released last Friday, said the
six-day strike resulted because outstanding grievances by Lihir workers
and landowners were not addressed by the LGL management for the past 18
months.
The report further stated that one of the landowner groups that was
involved in the strike was also seeking increased compensation, in
particular, for land where the airport is located.
The Put Put landowners took part in the strike because one of their
children was allegedly injured in a geothermal accident, where he
sustained serious burns.
They also placed gorgor at the Lihir gold process plant facilities over
claims the mining company had built a 50MW geothermal power station
without landowners approval.
The workers involved, however, had multiple grievances covering
inequality of terms and conditions of employment, inequality of pay, the
outsourcing delocalisation of services previously provided by local
contractors to external contractors and the relocation of the head
office from PNG to Brisbane, among others.
Meanwhile, Credit Suisse said there would be an increased cost pressure
if the site becomes unionised.
“It now appears certain to us that Lihir will move from being non-unionised
to a unionised site and this may lead to further cost increases to
bridge the gap between local and expatriate conditions,” it said in the
report.
The report further said the impact of the strike was not noticeable in
the short term but risky for the long term.
“Long term in terms of risk of increased industrial disputes if the site
becomes unionised.
“This could see some equity discount applied for the elevated risk level
and potential for a higher cost of dent required to fund the expansion
if credit providers are now more focused on pricing risk.”
The Credit Suisse report also said the strike appeared unlikely to be a
material of influence on the share price, having an impact between
US$0.00 and US$12 million on 2007 financial year earnings.
“Management confidence in the production upside to second half of 2007
could see the second half forecast of 425koz to 455koz still achieved or
exceeded despite the potential loss of 10 days, or 25koz of production,”
the report said.
 
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