Operating on solid ground at last
An immediate challenge was dealing with the aftermath of Marikana. The restructuring and turnaround to profitability makes for great memories
Appointed as Lonmin CEO in July 2013, a month before the oneyear anniversary of the Marikana tragedy, Ben Magara plunged himself into building relationships with more than 38,000 staff and, critically, his management team.
He tells a story of being called out as a “liar” by a grizzled old rock drill operator during his first day on the job when he visited one of the company’s mines and told the assembled miners he knew underground working conditions and could operate a jack hammer.
Proving the point and winning the hearts and minds of that team underground, wielding the heavy drill for hole after hole, is the mark of the human touch that Magara brought to Lonmin, far removed from the previous CEOS who were office-bound in either London or Johannesburg.
Sitting in the cramped, steaming hot conditions underground, he would engage crews on the economics of mining, a lesson he took to the surface when engaging with the newly dominant Association of Mineworkers and Construction Union (Amcu).
“My immediate challenge was dealing with the aftermath of the Marikana tragedy. It was to build bridges,” he says.
“It wasn’t that the assets were at fault, or that there were technical issues, it was the softer issue of relationships and I was confident they could be repaired.”
Magara went on a whirlwind tour of every shaft, meeting and greeting employees and showing people there was a new, hands-on CEO in charge.
His tour included all the processing plants, and, critically, the widows and families of those killed at Marikana in August 2012 and in the run-up to that day.
“My priority was relationships and to show that we are all just human beings.
“We can’t be killing each other. Relationships are nothing without results, that if there’s no output and no cash, then you haven’t achieved anything. Making those relationships productive was the real success for me.”
Winning over the employees was one thing, but there would be a far greater challenge for Magara as he inherited an executive committee traumatised by the events around Marikana that didn’t fully back him, with business unit heads seeing themselves as in silos and in competition.
He says he had a close relationship with then chairman Roger Phillimore and Brian Beamish, but in the daily operations things were far more complex.
Turning around the executive committee took longer and was far more difficult, but he was at last able to bring to bear his extensive mining experience.
He has replaced some members as they left with younger, fresher, talented people and the feeling is that the company is humming along at an operational level.
Putting the business into a position where it hasn’t lost money for more than a year, Magara is pragmatic about the envisaged takeover by Sibanye-stillwater.
“Consolidation is right for Lonmin. We were either making millions or we were begging for money. We are a single-commodity producer in a single location, with volatile labour and communities. The risks are high and we’ve seen the consequences of that,” he says.
The biggest win for Sibanyestillwater, if the transaction completes as expected, is not only the shallowest mines in the Rustenburg area and excellent smelting and refining plants, but the team that drove Lonmin to more than 15 months without a fatal accident.
“Sibanye-stillwater can take the best managers from Lonmin and make them part of their safety solution. We have moved on from the old way of command and control and iit’s paying off,” Magara says.
“Lonmin has returned to profitability, we delivered more than we promised in most areas of business since the 2015 Rights Issue and this year we made an operating profit of $101m — I am particularly proud of the first payment of our Employee Profit Share Scheme.
“We have indeed turned the corner but it is insufficient to save jobs as we don’t have sufficient capex to invest in future mines.”
What it means: The company has returned to profitability and has built a team that will enhance the new merger partner’s operations