Lonmin boss exit rousts markets
‘PERSONAL REASONS’: DIVIDED REACTION TO MOOLMAN’S DEPARTURE
The market hasn’t taken kindly to news that the platinum mine will lose Ben Moolman.
Lonmin’s share price tanked more than 6% yesterday after news hit the market that the troubled miner’s chief operating officer was saying goodbye.
The market hasn’t taken kindly to news that troubled platinum miner Lonmin will lose its chief operating officer (COO), Ben Moolman, who has resigned for personal reasons.
After more than two years in the role of COO and director, Moolman would step down on April 5, Lonmin said yesterday, without naming a successor.
Rollercoaster reaction
The JSE share price of the platinum miner gyrated in reaction to the news , first leaping from R17.64 to R18, and then retracing rapidly, hitting bumps in confidence, to eventually trail its opening price by 6.46%, plumbing R16.50 by 3.30pm.
The world’s third largest platinum producer, which was saved from collapse in 2015 with a $400 million deeply discounted rights issue, reported weaker than expected production, saying that larger shafts, known as generation 2 shafts, had disappointed.
Generation 2 shafts are wider, chasing thicker seams of ore that theoretically allow for mechanisation and faster, cheaper extraction in greater volumes. That is next to impossible in generation 1 shafts, that are more vertical and narrower, enforcing labour-intensive extraction methods, primarily using a jackhammer.
Lonmin also said initiatives to improve production were taking longer than planned.
“It’s not ideal that their main technical person is gone. It’s another signal that Lonmin has some real problems,” Peel Hunt analyst Peter Mallin-Jones said.
“They are facing challenges in managing its workforce, managing the local community and managing the age of its assets, all at a time when platinum group metal pricing is relatively low and therefore margins are very thin.”
Platinum prices rose just 1% in 2016, failing to join the rebound in the prices of some other metals, and leaving Lonmin out of the wider recovery in share prices in the mining sector that began last year.
Lonmin has also been taken to task by the South African government, which threatened to take away its licence at the end of last year if it did not build the houses it had promised for its employees.
However, some analysts said Moolman’s resignation was not a concern.
Momentum SP Reid Securities analyst Sibonginkosi Nkosi said Lonmin’s chief executive Ben Magara was a seasoned operations manager.
‘Seasoned operator’
Magara, a mining engineer, was head of Anglo American Platinum’s engineering and capital projects and is the former CEO of Anglo American’s South African coal unit.
“I was questioning why Lonmin needed a COO when Ben Magara is an operations guy. We know that he is Mr Fix-It. That function (of COO) can easily be slotted in under Magara,” Nkosi said.