Johannesburg - Suggestions by Lonmin that it will cease trading if it is unable to raise $400 million (R5.5 billion) from shareholders have angered the Association of Mineworkers and Construction Union (Amcu).
Amcu said yesterday that the government should consider confiscating the mining licences of companies like Lonmin if they did not abide by the terms and conditions of the licences.
Lonmin’s demise will put about 35 699 jobs at the world’s third-biggest platinum producer on the line.
The company has urged shareholders to approve the $400m equity cash call at next week’s meeting, saying it was crucial to its survival.
Lonmin’s shares in Johannesburg fell as much as 10 percent before closing down 8.79 percent at R4.98.
The company has been rocked by strikes, rising debt costs and weak platinum prices. Lonmin said last month that it planned to raise the money, as well as $370m in bank loans, to refinance debt due in May.
“The group may have to cease trading at some point between December 2015 and May 2016 and shareholders could lose the entire value of their investment,” the company said.
Peter Major, an analyst at Cadiz Corporate Solutions, said Lonmin had no future and had been like this for the past three years.
“Investors are not donors and expect returns on their investment. Lonmin has been a lifestyle company that has subsidised employees and managers,” he said.
Industry struggling
“We believe the government is not doing its best to ensure the industry is stabilised. It is struggling because for years firms have been allowed to do things that are not in line with sustainability of the sector,” Amcu treasurer Jimmy Gama said yesterday.
Amcu is the majority union in the platinum belt and led last year’s five-month strike for higher pay at platinum majors.
Eric Gcilitshana, National Union of Mineworkers’ health and safety secretary, said the company had indicated in July that it was in financial crisis and had initiated a Section 189 process, a requirement by law before retrenchments.
“We have not been informed of the new developments, possibly because we are not the majority. I don’t know.”
To try to turn around its fortunes, the miner announced in July a plan to close or mothball several mine shafts, putting 6 000 jobs at risk.
The cash call has the backing of Lonmin’s third-largest shareholder, the Public Investment Corporation (PIC), which has said it is willing to take up more than it is entitled to.
Lonmin said the Bapo community would also back the issue.
BUSINESS REPORT