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HARARE  - Employment in the ailing mining industry has been dealt yet another blow after Lonmin, the world’s third-biggest platinum producer, announced that it planned to axe 1 139 workers including contractors.

The announcement sent jitters in the market with trade union Solidarity confirming that it had been officially informed of plans to cut 1 139 jobs by Christmas.

Solidarity general secretary Gideon Du Plessis said that the first consultation on the job cuts was scheduled for tomorrow (WED).

“Lonmin says that the platinum sector is under pressure due to low platinum prices and rising costs that necessitate retrenchments,” Du Plessis said. “Because of these cost pressures, Lonmin has decided to place a number of its marginal shafts under care and maintenance and that is the reason why the 1 139 workers will be affected.” 

Lonmin confirmed that it had begun a consultation process under sections 189 and 189(A) of the Labour Relations Act as part of its effort to ensure the sustainability and prospects of the company.

“Increasing cost pressures and the persistently low Platinum Group Metals prices make it necessary for Lonmin and its sector peers to consider additional measures in the interests of all stakeholders,” the company said.

In August Lonmin announced cost-cutting measures that included the reduction of overheads by R500 million by the end of September 2018.

Lonmin also said the cost-cutting would include the sale of excess processing  capacity of up to 500 000 platinum a year in a bid to release capital.

“The announcement of a Section 189 process is part of a review of Lonmin’s operations intended to protect the employment of the majority of the workforce, improve efficiencies, streamline the business and optimise cash generation and favourably position the Company to take advantage of any future improvements in the platinum industry,” the company said.

“It is expected that some 446 people accounting for 1.8 percent of the total workforce might be affected at this stage.” 

The news comes just weeks after Lonmin’s competitor, Impala Platinum, last month said that at least 2 800 employees at its Rustenburg operations may be affected by a restructuring process to keep the business running.

In June it was announced that more than 2 600 mine workers were set to lose their jobs at the Bokoni mine the joint venture between Anglo American Platinum and Atlatsa Resources after a notice to suspend operations   and place the mine on a care and maintenance programme.

Lonmin share price closed 3.35% higher at R16.33 yesterday, however in the year to date the share price is nearly 50% lower,

Earlier this month the company said that lenders had granted it a 12-month “breather” for its financial covenants. 

The producer said that banks had waived two debt covenants from September 30, 2017, to March 30, 2018. 

“The waiver paved the way for the extension of the Saffy shaft without having to spend R2.6 billion of capital expenditure, of which R1.6bn would have been required over the next four years,” it said.

Lonmin shares rose 3.1% on the JSE yesterday to close at R16.29.

-BUSINESS REPORT