Dineo Faku and Donwald Pressly
LONMIN anticipated that the events that rocked its Marikana mine near Rustenburg in the past 10 days would affect its credit profile, it said yesterday.
This comes amid confusion over whether the group would enforce an ultimatum for its employees to return to work.
The third-biggest platinum producer said it would observe a day of mourning tomorrow for grieving employees to deal with last week’s killings.
During the days of lost production, Lonmin had been closely monitoring its debt position, warning it expected to be unable to fulfil its loan commitments falling due on September 30. It was considering entering the equity capital markets to make up shortfalls.
The company said it would make a further announcement when appropriate.
In its latest annual report Lonmin said it had consolidated its bank borrowing with new facilities of $945 million (R7.7 billion). This comprised $700m supported by BNP Paribas, Citigroup, HSBC, JPMorgan Chase, Lloyds TSB Bank, Royal Bank of Scotland and Standard Chartered.
Another R660m was held by FirstRand, Investec and Standard Bank and those covenants required a maximum net debt to earnings before interest, tax, depreciation, and amortisation (Ebitda) ratio of 3.5 times.
Yesterday the company said that it was taking a “cautionary stance”, and it would not force employees to return to work as it recognised the trauma suffered by people in Marikana.
“Lonmin is not taking a hard line attitude, we’d like to see people come to work, but we are not going to force them to do so,” a company spokeswoman said.
Police Minister Nathi Mthethwa, part of a ministerial task team appointed by President Jacob Zuma to help in the aftermath of the killings, said on Monday that the ultimatum would not be effected this week. He said the government wanted an agreement with the mine on the issue.
Previously, the Lonmin management said the deadline for employees to return to work was Monday or they would face disciplinary action.
However, the company extended the ultimatum by an extra day. Following engagements with stakeholders, it said the workers who missed the deadline would not be dismissed, added that this was the right thing to do while “all parties work together to help restore stability to both the mines and the region”.
A top economic analyst has called on the government to “take a reality check” and be cautious in calling on companies such as Lonmin to respect a week-long period of mourning and allow striking workers to stay away from work.
Cabinet ministers who insisted that workers stay away were not saying who would pay if the mine, which was still forced to pay non-striking workers, had to shut down, Economists.co.za chief executive Mike Schussler said.
“Is (the) government going to bail it out?” Schussler asked.
He said figures showed that the salaries at the Marikana mine – where 34 miners were killed last Thursday – were actually far higher than reported. He said rock drill operators were paid about R10 500, which was probably the gross rather than the net income.
The Association of Mineworkers and Construction Union had been demanding R12 500 a month. Figures reported in the media of incomes of R4 000 to R5000 a month were apparently wrong, but could apply to net incomes after deductions.
Schussler was reacting to Mthethwa, who reported that Lonmin management had agreed to revoke its ultimatum to workers that they should return to work – or face dismissal. The police minister said that President Jacob Zuma had declared this week “a mourning week”. He called on all, “including mine bosses”, to respect this call.
But Schussler noted that after the earthquakes in Japan, workers did not stop work. Flags were simply flown at half mast, rather than workers taking time off.