Johannesburg - Around 35 000 Lonmin employees had secured their future ahead of the festive season after the company’s shareholders backed a key plan to raise money, Franz Stehring, the United Association of SA’s divisional manager for minerals, said on Friday.
These comments come as Lonmin shareholders last week approved a $407 million (R5.7 billion) bailout that will see it continue trading amid a situation when around 50 percent of the industry is loss making after being rocked by strikes and a sliding platinum price that last week fell as low as $846.10 (R11 789), the metal’s lowest level since late 2008.
Approved
Lonmin, which has seen its share price plummet by more than 99 percent this year, lost as much as 87 percent on Friday after shareholders approved the rights issue on Thursday.
The shares closed down 85.64 percent to 29 cents, which valued the company at R742m.
“Although there is a Section 189 (restructuring notice) over our heads, the majority of employees have a future, and can go into the festive season knowing they have a future. We are thankful for the jobs,” Stehring said. Lonmin is cutting unprofitable production through the closure of shafts.
About 6 000 jobs are expected to be lost by September next year as a result of this restructuring as part of a business plan to turn things around.
“Ben Magara, Lonmin chief executive, has assured us that the new business plan is based on a low platinum price. At the end of the day, we will have 6 000 jobs down the drain, but the 6 000 jobs will help protect thousands of jobs. We have to have a balance. I can assure you that he is a very relieved man,” said Stehring.
Eric Gcilitshana, the National Union of Mineworkers’ health and safety secretary, said he was hoping the bail-out would help prevent job losses.
“If you follow Lonmin’s plan, it hopes to see returns by 2018 and that by 2020 it will operate fully without any problems. It gives us hope,” he said.
Gcilitshana wants Lonmin to strengthen its policies.
“We see that either Lonmin or the Association of Mineworkers and Construction Union (Amcu) run the show. Amcu does as it wishes without considering the outcome for the company. If Lonmin continues to allow this, the bail-out is not going to help,” he added.
Majority union Amcu said last week that it was hoping Lonmin would exercise capital discipline. “The company has to plan properly about how it will manage cash flows better,” Amcu’s national treasurer, Jimmy Gama said.
Lonmin was not yet out of the woods, despite the rights offer, added Stehring. “It has made promises which it needs to fulfil, their neck is on the block,” he said.
Magara told Radio 702 that the company had 38 000 jobs last year and the figure had declined to 35 000, after 3 000 employees left the company. “We will get down to 32 000 jobs by end of next year,” he said.
“We are pleased because of co-operation with our unions in persuading members to take voluntary severance packages and retirement packages. We are 50 percent through the plan of cutting jobs,” Magara said.
Magara said Lonmin’s relationship with unions had improved.
Lonmin is not only raising $407m, but also $370m in debt from the banks, which gives it $770m to execute its business plan.
BUSINESS REPORT