Lonmin scraps bosses’ share options
Shaft mothballed as strikers cut demands
LONMIN terminated an engineering contract for one of its shafts yesterday and scrapped a performance scheme that awarded shares to senior executives, including chief executive Ian Farmer, as the embattled platinum producer scrambled to contain fallout from a wildcat strike that has crippled its Rustenburg operations for more than a month.
The latest developments serve to underscore the strain that Lonmin is taking as close to 30 000 employees from its Marikana complex continue to press for higher wages in a dispute that has seen the government deploy the army and the police to quell unrest in which 45 people have died.
Platinum fell, snapping the longest rally in 25 years, as supply concerns ebbed, amid signs that labour disputes on the platinum belt may be resolved.
Lonmin previously warned that the strike could force it to violate its bank covenants as production stood still.
The cancellation of the contract for work at Marikana’s K4 shaft was effective from October 17 and about 1 200 Murray & Roberts contract workers would be affected, Lonmin said. It also slashed its sales forecast for the full year to September, blaming the ongoing strike.
It forecast annual sales in the range of between 685 000 and 700 000 saleable ounces of platinum, down from an initial forecast of 750 000 saleable ounces. Even so, Lonmin shares surged 6.1 percent to close at R86.97, a move that one analyst said was because the outlook was “less bad”.
Wage talks with the representatives of striking workers resumed yesterday and by the end of the day, there appeared to be some headway in discussions as one of the negotiators suggested that the strikers might be open to reducing their demand for salaries to R11 000.
Zolani Bhodlane, a spokesman and member of the workers’ committee involved in the negotiations with Lonmin management, said a compromise had been reached but could not provide any specifics, saying detailed comment would unnecessarily jeopardise the negotiations.
More than 5 000 workers met at the Wonderkop stadium in Marikana to chart a way forward amid a heavy police and army presence. Earlier in the day, police barred expelled ANC Youth League president Julius Malema from addressing the crowd as the clampdown announced by President Jacob Zuma’s government last Friday continued. Malema has been accused by the government of inciting violence after calling for a nationwide strike and for the mines to be made ungovernable until the leadership of the ANC-aligned National Union of Mineworkers stepped down.
Malema has blamed Zuma for the killing of 34 striking Lonmin miners in a confrontation with the police last month at Marikana.
Police arrested 42 protesters at Robega Village outside Royal Bafokeng’s Rasimone North mine for gathering illegally.
Bishop Johannes Seoka, a member of the negotiation committee, said he was optimistic that the new wage demand would finally put an end to the industrial action, and see the community return to normal.
Lonmin is scrambling to find ways to offset the impact of the strike on its balance sheet. The strike, which started on August 10, came at a time when the platinum industry was already reeling from stunted demand and soaring costs.
Lonmin has set a goal to reduce annual capital expenditure in the 2013 and 2014 financial years to $250 million (R2.1 billion) a year. The company has reduced capital expenditure guidance for the 2012 financial year by $20m to about $430m.
There have been fears that Lonmin might resort to job cuts as a result of the strike, but the company has still not indicated if job cuts are on the horizon. It did say K4 shaft would be put on care and maintenance.
Anglo American Platinum, the biggest platinum producer, which halted production at its Rustenburg operations last week until it was deemed safe for staff to work, said yesterday it would resume output today.
Aquarius Platinum and chrome producer Xstrata Alloys on Friday closed operations amid rising tensions, and both companies resumed operations yesterday.
Meanwhile, a strike by 15 000 employees at Gold Fields’ mine in Carletonville continued. Employees at Gold Fields tabled 10 demands, including a salary increase to R12 500. Business Watch, page 16