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Lonmin takes first steps to recover

Dineo Faku

IN an effort to repair the tattered relationship with its employees and host community, Lonmin, the third-biggest producer of platinum, has initiated a process of change.

Labour relations at the troubled mine broke down amid a violent wildcat strike over wages, which resulted in the killing of 50 people around its Marikana mine in the North West in August last year.

The initiative, announced by Lonmin chairman Roger Phillimore at the company’s annual general meeting in London yesterday, will hopefully tackle the socio-economic issues that fuelled the bloody month-long strike.

Addressing shareholders, Phillimore said the mining industry needed a fundamental change in the way it did things.

“We require a collaborative model of decision-making that will help to resolve problems and disagreements before they turn into violence,” he said.

“The mining industry in South Africa is at a crossroads. It is imperative that Lonmin does its part to contribute to improved relations with its employees both in and outside the workplace. We are committing to a long-term process of fundamental change.”

Investors seemingly welcomed the announcement as the Lonmin share soared 12.33 percent to close at R50.55 on the JSE yesterday.

In terms of the plan, Lonmin aims to collaborate with its employees, community leaders, government representatives and investors. Key priorities identified comprise cementing amicable labour relations, improving accommodation, revising the migrant labour system and kick-starting share ownership by employees and communities.

The company said it was aiming to conclude an agreement that provided appropriate representation to all unions and associations that have support of a significant proportion of workers.

Employees are also likely to benefit from a proposal to establish an employee share ownership plan and a community share ownership trust and co-operate closely with entrepreneurs for the community around Lonmin mines.

The company proposes to review the migrant labour system and explore alternative leave or shift patterns to allow employees to return to their homes regularly.

Lonmin will explore with unions and industry peers ways to make better use of the infrastructure and hence invested capital. The firm will also complete the conversion of all its hostels to decent and affordable family or single accommodation units by 2014.

National Union of Mineworkers general secretary Frans Baleni said solutions to problems in mining required a collaborative effort. The union was not aware of the proposed initiative, he said.

“Its always difficult when people decide on our behalf. If they sat in a corner and decided what should be applicable for us, it is going to be a problem. Any solution should be a joint initiative,” he said.

Besides labour problems, Lonmin is searching for a new chief executive after Ian Farmer resigned last year amid recovery from a serious illness.

“We are looking forward to management changes, with the resignation of Farmer, we wish for fresh legs,” Phillimore said.

Lonmin reported a minor dip in ore mined at Marikana in its first quarter to December last year to 2.7 million tons, down 26 000 tons from the same period the year before. Lonmin said the performance was relatively flat from a year earlier but it masked two trends.

First, it said, the prior year’s results were unusually affected by a high incidence of section 54 safety reviews and stoppages. Section 54 shutdowns in the first quarter of the previous financial year cut 177 000 tons of ore mined, compared with 19 000 tons in the first quarter of this year. In the second place, first-quarter figures reflected the re-commencement and gradual ramping up of production during the quarter.

“The performance is commendable with tons mined well ahead of the ramp-up plan and overall mining divisions’ output up 78.2 percent from 2012.”

Lonmin has maintained its full-year guidance at 680 000 ounces of saleable metals in concentrate and sales of 660 000 ounces of platinum. It also maintain its capital expenditure guidance for the year of around $175 million (R1.5 billion) and unit cost guidance of around R9 350 per platinum group metal ounce produced without any material safety or industrial relations stoppages.

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