Lonmin’s job losses take centre stage
Job losses took centre stage at the Competition Tribunal hearing on the proposed merger of Lonmin and Sibanye-Stillwater, which started on Monday.
Lonmin has been struggling to survive in an environment of low platinum prices and rising costs. Its proposed acquisition by Sibanye-Stillwater will bring it back from the brink, but the future sustainability of the company means more than 13,300 jobs will have to be cut.
In September, the commission recommended that the merger be approved with conditions. However, the tribunal has heard that a key dispute between the commission and the merging parties is the number of job losses that may result from the merger.
Advocate Alfred Cockrell, who represented the merging companies, pointed out that neither the Competition Commission nor any of the intervening parties had raised competition issues in relation to the merger.
“This is a public interest case, not a competition case,” Cockrell told the tribunal. About 13,344 jobs will be lost but the merging parties claim Lonmin would have cut 12,459 jobs regardless. So Sibanye-Stillwater’s deal accounts for the loss of 885.
But the commission said were it not for Sibanye-Stillwater’s involvement, more than 3,000 jobs would be saved.
The commission’s Grashum Mutizwa said that in August 2017, before the merger was on the table, Lonmin expected to retrench 10,156 workers as part of a business plan. But after a proposal was received from Sibanye-Stillwater in October, a letter from Sibanye CEO Neal Froneman indicated that Lonmin’s proposed job cuts were not sufficient to ensure the company’s survival and 1,800 additional cuts were required.
Lonmin’s revised business plan showed higher job losses of 12,459. This, Mutizwa said, appeared to have resulted from Sibanye’s influence and could not be seen as Lonmin’s standalone plan.
Cockrell argued that the number of estimated job losses increased when it became clear that funding could not be secured for a particular project.
If the merger did not go ahead, Lonmin would find itself in a very difficult spot, Lonmin CFO Barrie van der Merwe told the tribunal.
“The chance that the company runs out of cash in the next 18 months is a reality,” he said.
The hearing continues until Wednesday.