Lonmin to slash thousands of jobs

Company that suffered long and deadly strike seeks to cut its costs

THE world’s thirdlargest platinum producer, Lonmin, is planning to cut 3 500 jobs using voluntary layoffs in a bid to slash costs as the price of the metal falls.

“We are in talks with our employees and unions about reducing labour costs by 10%, which may result in a headcount reduction of of 3 500 colleagues,” chief executive Ben Magara said yesterday.

Lonmin, which owns the Marikana mine near Rustenburg in North West, where 34 workers were shot dead by police during a strike in 2012, said it had held constructive talks with trade unions.

“We are having to take this tough decision because it is important to protect the majority of our jobs.”

Magara said the company had taken the necessary decision, in reviewing its oper- ating model, to implement an efficient operating structure that would better drive ownership and accountability while empowering operational management.

“This has resulted in the amalgamation of layers of management and reduced costs and may impact up to 3 500 people through voluntary separation packages and early retirements,” he said.

“We are aware and con- cerned about the socio-economic effects of job losses and we are encouraged by the interaction we are having with the relevant stakeholders.

“We have to spend within our means in this low platinum group metals price environment,” Magara said .

The dual-listed company cut its capital expenditure forecast for the year to R1.9-billion from R2.2-billion. Lonmin previously reduced its guidance from R3-billion in January.

Revenue for the period was R6.1-billion, falling short of expectations and down from revenue of R6.9-billion in the year-earlier period.

Looking ahead, Lonmin said demand for platinum was expected to increase over the next five to 10 years.

Market commentators are in agreement that demand will recover and outstrip sup- ply as the implied aboveground stock, which is putting a damper on the price performance of the metals, diminishes.

“While we agree with commentators that the average growth rate in automotive demand for platinum will range between 2.25% and 5% over the next decade and, through Lonmin’s collaborative efforts, jewellery will grow well in line with economic average growth forecast in developing economies over this same period, we foresee primary supply from southern Africa struggling to maintain current quantities over the next five to 10 years and expect growth to be below 1% over this period,” the company said.

The share price has fallen 47.49% since the release of its last interim results.

Early in the day, Lonmin was up 0.77% to R26.30, valuing the company at about R15.2-billion .