Lonmin keeps suppliers in the loop on output resumption

Dineo Faku

SUPPLIERS to embattled platinum producer Lonmin are keeping tabs on how soon the company’s Marikana mine near Rustenburg in the North West will resume production.

The mine, which was the scene of unrest that culminated in the killing of 44 people last month, has been idle for more than three weeks as striking miners are refusing to return to work until their demand for higher wages is met.

The labour dispute has taken a heavy financial toll on Lonmin, forcing the company to warn last month that it may violate its bank loan covenants.

Lonmin was keeping its suppliers abreast on day-to-day developments around the three-week illegal strike at its Marikana operations, Sue Vey, a spokeswoman for the mine, said on Friday.

And while the firm’s biggest service providers were mum on Friday about the impact of the strike on their balance sheets, local suppliers said they were anticipating less demand for some of their services because of the mine shutdown.

“We are trying to keep suppliers aware of what is happening, so they can prepare on their side. We will eventually get to the stage when we make a financial decision, but now we are trying to get operations going again,” Vey said.

Eduard Jardim, a spokesman at Murray & Roberts, said the firm’s Cementation Africa unit was involved with an access development contract at Marikana’s K4 shaft.

He added that all contracts related to Lonmin underground mining projects made up 7 percent of the current Cementation Africa order book and less than 1 percent of the total Murray & Roberts group order book.

“We anticipate some reduction in scope on some Lonmin projects.

“This is due to the after-effects of the strike, as well as the recent announcement by Lonmin that the company will be reducing capital expenditure,” Jardim said.

“Lonmin is a responsible client. We do not anticipate any payment challenges.”

Sandvik, which supplies engineering and construction equipment to Lonmin sites, said so far the shutdown had not had “any material financial effects, and had no indications that they [Lonmin] will not be able to meet their obligations”.

Jacqui O Sullivan, the spokeswoman for Sasol, said: “Sasol supplies a wide range of products to a large number of different customers in South Africa’s mining industry.

“Any industrial action that causes a reduction in mining input has some impact on the demand for these products.”

Swiss-based Eaton Corporation, a global technology firm and one of Lonmin’s biggest suppliers, declined to comment on Friday, saying that it was against company policy.

Ed Lemke, the managing director of Ecochem Pumps, said: “The strike will not affect us today, but has already impacted on the rate of exchange. We are not feeling the pinch yet, and it is too early to say what the long-term effect will be.”

Lonmin signed a peace accord with trade unions including the National Union of Mineworkers and Solidarity on Wednesday last week , but the Association of Mineworkers and Construction Union (Amcu) and independent worker representatives declined to endorse the agreement.

The workers’ representatives and Amcu said they first wanted their salary demands to be addressed. Salary talks will resume today.

Early last week the Lonmin stock touched lows 25 percent below the price that prevailed before the strike, but on Thursday and Friday the shares strengthened 10 percent as the market welcomed news of the signing of a peace accord and a surge in platinum prices. page 16