JOHANNESBURG - The Association of Mineworkers and Construction Union (Amcu) legal bid to prevent the R5 billion merger between diversified mining house Sibanye-Stillwater and platinum producer Lonmin failed on Friday after the Competition Appeal Court dismissed it, paving the way for the finalisation of the transaction that has been in the pipeline since 2017.
The Cape Town-based court ruling removed a major hurdle for the merger that is expected to provide a lifeline to troubled Lonmin, the JSE listed miner that has been besieged with liquidity constraints between 2014 and 2017.
Lonmin was the centre of a five month unprotected strike in 2012 that saw more than 44 people were killed in violent clashes in Marikana.
Judge Dennis Davis said in his written judgement that the court could not interfere with the merger process.
"There should be no difficulty in understanding that courts should not play dice with the welfare of workers, particularly in a country with notorious levels of unemployment as in the case of South Africa," Davis said.
The Competition Tribunal gave the merger a green light with conditions that included a six month moratorium on retrenchments from the date of the approval and to create job opportunities for more than 3 000 miners that could be affected.
However, Amcu approached the court charging that it could not 13 334 would have been retrenched as a result of the merger. It also argued that the six-month moratorium on retrenchments and the job creation initiatives would be undertaken on condition that the platinum price improved.
Davis said the court had been confronted with public interest concerns in the merger which potentially placed 32 000 jobs at risk. Davis also said that the job losses at Lonmin were 'rationally' connected to Lonmin's precarious financial position.
Sibanye-Stillwater chief executive Neal Froneman said the company was pleased that the Competition Appeal Court had upheld the decision of the Competition Tribunal.
" We are confident that the integration of Lonmin’s PGM assets and Sibanye-Stillwater’s adjacent PGM operations will ensure a more sustainable and positive future for these assets. We believe that the transaction continues to be in the best interest of all stakeholders."
Last week Lonmin, the world's third biggest platinum miner, said it net cash for the year to end March was $71 million compared to $17 million at 31 March last year while liquidity increased to $247 million from $167 million the prior year with the new Pangaea Investment Management Limited facility in place.
Lonmin's financial woes have been helped by the improvement in the platinum group metals prices that have been boosted by record palladium and rhodium prices.
However, the miner warned that despite the progress made, this does not provide a long-term solution to the capital structure challenges faced by Lonmin, as it is still inadequate to invest in the new projects necessary to avoid shaft closures and job losses and maintain our production profile.
Lonmin chief executive Ben Magara said the court ruling would clear the way wards the shareholder votes this month.
"The combination creates a larger and more diversified company which we believe is in the best interest of Lonmin shareholders and other stakeholders,” he said.