EMPLOYEE RELATIONS Putting people first

Lonmin has made major strides in improving its relationships with its employees, following the Marikana incident last year. And, despite tough conditions, the company has also produced solid financial results during the past financial year.

“These were challenging times but the management team rallied all our employees and performed creditably, working in unison and taking on new responsibilities in some cases,” says chief financial officer Simon Scott.

“We took a realistic view on the ramp-up of our operations after the six week closure and, in the event, did better than expected, achieving our highest production in six years. We also had an excellent safety performance. Though there were, regrettably, three fatalities during the year, the lost time injury frequency rate improved by 15,9%.”

Lonmin’s attributable profit rose to US$166m in the year to September 30 2013, compared to a loss of $410m the previous financial year. The cost base increased significantly, notably due to high wage inflation and electricity rate increases (though the increase in unit costs was well contained at 3,8%) which, together with flat metal prices, put profit margins under pressure.

The weakness of the rand, together with positive stock movements, offset the increased costs and contributed to the improved profitability. Net cash stood at $201m at year-end, compared to a net debt of $421m a year earlier, following a rights issue in December last year which yielded net proceeds of $767m.

“In response to the Marikana incident, the Lonmin board early this year announced five key initiatives that are underpinning a new way of doing business, putting the creation of functional and healthy mining communities at the heart of what we do,” Scott says.

One of these initiatives aims at building a collaborative model of decision making with the company’s employees. “The relationship