Lonmin retrenchments a ‘last resort’

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IOL BR mining PIC001 Reuters.

Lonmin Platinum has stated it would only retrench employees as a last resort, trade union Solidarity said after meeting the company on Friday.

“Lonmin made it clear from the outset that it is not their intention to go through a wholesale job reduction process, but that they would review their operating model to optimise business processes and leverage synergies in the organisation, that may result in job losses as a last resort,” Solidarity general secretary Gideon du Plessis said.

It was the first consultation after the company sent unions a notice on Tuesday that it is contemplating restructuring.

Du Plessis said the parties were committed to alternatives to avoid retrenchment, or at least drastically minimise the number of employees, out of the total workforce of 28,042, that might be affected.

Solidarity's cost-reduction proposals were:

- re-prioritising the company's capital intensive projects and the temporary suspension of expansion projects to reduce cost pressure;

- maximising capital spent on community projects through collaboration with all stakeholders, including Solidarity;

- amalgamation of departments where their scope of business overlap to remove inefficiencies and cost duplication, without job losses.

Solidarity proposed “insourcing” certain outsourced services and minimal use of external consultants.

Lonmin told the union it would consider Solidarity's proposals and a follow-up meeting would be held next week where the company would say more about which areas and which employees would be affected.

Lonmin would also make proposals regarding other cost-saving initiatives.

Solidarity commended Lonmin on its commitment to explore possible alternatives to retrenchments and said it was satisfied that their members with core mining skills would not be affected.

In August a massive strike started at the company and in the days preceding August 16, 10 people, including mine security guards and policemen were killed at their Marikana operations.

On August 16, 34 people were killed in a clash with police. Two people died after that.

The company said in its Fourth Quarter 2012 Production Report that 40 of the people who died during the strike period were Lonmin employees.

Workers finally returned to work with an above-average increase and a once-off R2000 bonus.

The average 14 percent increase those categories of workers received is cited as one of the cost pressures in the company's report, which said its wage bill would go up by 11 percent.

In the report, the company also said its ramp up to full production had gone better than expected.

Platinum production was “only down 20.8 percent as ounces extracted from stock pipeline”.

Sales for the fourth quarter of the 2012 financial year were 3.7 percent lower than the fourth quarter of the 2011 financial year.

It said the US dollar basket price including base metal revenue, at US1,103 was 20.6 percent lower than the fourth quarter of the 2011 financial year, but 1.6 percent higher than the third quarter of the 2012 financial year.

But the company said debt levels would rise in the coming months to fund production ramp up and stockpile rebuild.

Covenants might be breached at the end of March without additional equity and amendments to existing bank facilities.

A proposed Rights Issue of approximately US800 million (gross) was planned to reduce indebtedness and increase financial strength.

“A number of measures are in place, or are expected to be implemented during the 2013 financial year, both to address the pressures of gross cost increases and also to improve the effectiveness of the company's expenditure,” the report said. - Sapa


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