Lonmin to cut jobs unless workers halt 15-week strike

Lonmin said on Monday it would have to cut jobs unless workers end a strike that has crippled the company’s platinum mines for more than 15 weeks.

“The business will have to be restructured with a consequence on job losses” if there’s further delay, chief executive Ben Magara said on Monday on a conference call.

The third-largest platinum producer appealed directly to workers by text message and voicemail after the Association of Mineworkers and Construction Union (Amcu) rejected the industry’s pay offer this month. Lonmin has “overwhelming support” from employees for a return to work from May 14, Magara said.

“We will have a better sense of the take-up towards the end of this month and whether we have the correct mix of skills to enable us to safely restart operations,” he said.

Anglo American Platinum, Impala Platinum, and Lonmin have lost R17.5-billion in revenue because of the country’s longest mining strike and workers have forfeited R7.8-billion in wages, according to a website the companies run. Amcu wants a R12 500 basic monthly wage plus benefits by 2017, while companies want cash allowances included.

Lonmin has skilled workers in place to resume processing in May before an expected ramp-up of output in June, Magara said. About 9% to 11% of employees reported for duty on May 9, Vice-President for Public Affairs Lerato Molebatsi said.

Threat of violence
Threats of violence may slow any return to work.

The National Union of Mineworkers (NUM), the former majority union on the mine and now a minority union, said one of its members and his wife were killed on Monday with machetes at Lonmin’s Eastern Platinum mines. “We are extremely sad and shocked at the killing of our members today,” Livuwhani Mammburu, an NUM spokesperson, said by phone. “You can’t say you want employees to come back and then they’re killed.”

Workers need to feel safe to return to work, Magara said.

“We have engaged with the government, we have engaged with mine securities to ensure that there can be enough visible enforcement and policing,” he said.

Agence France-Presse also reported that two other miners were hacked to death on their way to work on Monday.

Estimated cost
Magara, from Zimbabwe, became Lonmin chief executive in July 2013, 11 months after 34 protesters demonstrating over conditions were killed by police in a single day near the company’s Marikana operations. Amcu has surged in membership since the killings and is now the dominant union in South Africa’s platinum industry.

“Management is experienced at recovering from such disruption,” Investec. said in a note on Monday. “However, until workers return, estimating the operational performance in the year ahead is exceptionally challenging.”

Lonmin posted a loss of 35.5 cents a share in the half year ended March 31, after a profit of 13.3 cents a year earlier, it said on Monday in a statement. The strike by the dominant union at its operations since January 23 has resulted in 155 720 platinum ounces being lost, the Johannesburg-based company said.

Lonmin reduced spending about 60% and may cut it further to preserve cash during the strike, Magara said. Net cash totalled $71-million at March 31, with available debt facilities of $589-million, according to the statement. – Bloomberg

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Andre Janse
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