Fin24

The time is nigh for Lonmin

2012-09-09 10:34


Johannesburg - Lonmin [JSE:LON] would soon be faced with difficult decisions about its future should employees not heed its call to return to work, a situation deemed unlikely even by those parties committed to last week’s peace accord.

The platinum producer said on Friday it was expecting its workforce to return to work tomorrow.

Attendance across the group’s operations in North West has continuously edged lower since the massacre at Marikana on August 16, in which 34 miners were killed, bringing the number of dead to 44 in violent attacks since some 3 000 rock-drill operators embarked on an illegal strike over wages the week before.

The group reported a 2% average attendance on Friday.

Lonmin and three recognised trade unions – the National Union of Mineworkers (Num), Solidarity and Uasa – on Wednesday signed a peace agreement whereby the unions have committed to return to work tomorrow in return for a new round of negotiations with the company over wages.

Those who have not signed the agreement were the Association of Mining and Construction Union (Amcu), the favoured union of a majority of the striking rock-drill operators, as well as independent worker committees.

Amcu president Joseph Mathunjwa said on Friday the resolution of the strike depended on an agreement by Lonmin’s management for a R12 500 basic salary. 

“On the 16th of August (before the massacre) workers mandated us to go and ask Lonmin to commit to the process on how to reach their demand of R12 500. No other mandate was given to us by workers since then.”

Mathunjwa said Amcu didn’t sign the peace accord because the document didn’t respond to the workers’ wage demand. 

“The current situation needs Lonmin to put an offer on the table that will enable parties to engage constructively and objectively in the process,” he said, adding that Amcu would have been required to sit on the sidelines of negotiations even if it did support the peace accord.

Num general secretary Frans Baleni said the union would encourage its members to return to work tomorrow, but that turnout would be low should these workers be intimidated by their striking peers. 

“It’s a dilemma,” Baleni said, adding there was not much more the unions and Lonmin could do to stabilise 
the situation. 

“It will be up to government to play a bigger role,” he said.

Solidarity deputy general secretary Gideon du Plessis said the union was expecting increased levels of intimidation from tomorrow. 

“We don’t expect a high turnout,” he said, adding the union was fearing for both the safety of workers and the future viability of the mine. 

“This peace accord was the last way out from anarchy. This situation is not going to sort itself out. Somewhere, somebody will need to make a drastic decision,” he said.

Meanwhile, Lonmin said it was losing about 2 500 ounces of platinum production per day, implying a loss of some 70 000 ounces during the four weeks of the strike so far.

This was equal to about R800m in lost revenue. Lonmin has debt facilities totalling $945m, of which it had utilised $520m as at March 31 – the last time it reported financial figures.

The company earlier said the lack of income would result in it breaching some of the conditions attached to the debt facilities, and that it was renegotiating its position with its consortium of banks – a situation made much more difficult in the absence of meaningful production.

Should such negotiations fail, it might have to ask shareholders to pump new funds into the company for an amount enough to cover the debt facility.

Lonmin spokesperson Sue Vey said the company would not yet issue an ultimatum to workers, although it was confident many workers would turn up tomorrow. 

“The current situation cannot carry on indefinitely. At some point we’re going to have to make some decisions based on financial realities. We’re not at that point yet,” she said.

According to Justin Froneman, an analyst at SBG Securities, there remained much uncertainty in terms of the length of the strike, and its impact on the company’s earnings and balance sheet.

“If we don’t see some resolution next week, I think Lonmin will have to make some tough decisions on some of its operations,” he said.


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Comments
  • ike.jakson - 2012-09-09 11:08

    It’s a fine article but I think that the striking workers have the most difficult part when it comes to a decision. Lonmin is an old Company with a fine history; they are faced with unreasonable demands by agitated workers who are spurned on by politicos with their own agenda. If the Lonmin strikers want to join the unemployment group it is up to them. Lonmin will survive.

      joneethling - 2012-09-09 12:18

      Not realy.

      koos.vandermerwe.338 - 2012-09-09 13:43

      Old and new companies go belly up at some point in time. What makes this one a prime target is that it is owned by the British liberals that created and funded the ANC. It is coming full circle. Kry vir jou boet.

      ike.jakson - 2012-09-09 19:09

      Dankie Koos.

  • likeitis.insa - 2012-09-09 12:06

    Nou wil hulle nigh?

  • hermann.hanekom - 2012-09-09 12:09

    The New South Africa and its new democracy - it is called hatchet democracy. To negotiate is un-African - you bring your ears and chequebook and we bring the hatchet. Problem solved.

  • larry.piggott1 - 2012-09-09 13:34

    There are options available. 1. Mechanize. 2. Sell to a politically connected such as happened with Aurora. 3. close the operation until there is reason. Wait until hell freezes over and there is a competent Government.

      dexter.morganson - 2012-09-10 09:10

      Mechanisation won't help any now. South Africa lacks the skills and personal needed to effectively maintain such an operation. Besides the previous CEO Brad Mills' vision was Mechanised mining, "machines don't strike or cry", he implemented the move at Lonmin's Hossy Shaft. It was a disaster for obvious reasons, when he stepped down and Ian Farmer took over they had to redo the entire lay out and turn Hossy back into a Conventional mining operation, costing the company over 1.2Billion. http://www.miningmx.com/news/platinum_group_metals/Lonmin-faces-tough-choices.htm

  • nethanls - 2012-09-09 16:34

    Got no sympathy for huge conglomarates, riding on the poor, and the resources of our country. It will cost them only R375 00000 per month, and they make R8000 000 000, and they can't rize these poor peoples wages...perhaps suite will follow, we've got a pandemic of strikes following...across all sectors, if wage talks, and peace agreements fail.Ironic when most of what is ours, is owned buy either, british, American, or Indian financial gatekeeprs.That's what you get when opening Financial Markets, for so called financial freedom, these countries are milking SA, for long as they can, especially America, and Europe...

      mariette.brand - 2012-09-09 18:29

      Well, said!!! I totally agree! See the problem for what it is!!!

      deon.duplessis.96 - 2012-09-09 22:19

      Nethanis, looking forward to your presentation before the commission of enquiry. You are disclosing information that nobody in the world is aware of. Sure Lonmin Board and shareholders will be over the moon if your inside information is correct regarding their turnover. All platinum companies in the country are under severe pressure and therefore the appointment of the DMR special task team to deal with the crisis. Can't wait for your breaking news that will put SA and Eurozone back on track.

      dexter.morganson - 2012-09-10 09:13

      Where does it end? If they can have their pay doubled. The PTVs, Team Leaders, Miners, Shift Bosses and all their helpers WILL insist on having their pay doubled as well. That's just mining, then of course if/when that happens no doubt the Engineering personnel will follow suit and insist that their pay gets doubled as well.

      mariette.brand - 2012-09-10 10:50

      Dexter, so what you are basically saying is that it is a common unspoken agreement between everyone that it is justified what the striking mine workers are earning at the moment, compared to what everybody else is earning. If they get higher wages, other, already well paid workers, will want more because it's not fair, because they deserve more in their own minds, and are worth more in their own minds? Nothing can justify a payslip of R1.2 million PER MONTH in this country where people struggle to put food on the table, never mind paying rent, paying for basic services, sending your kids to school, or getting decent medical care. It is not justified to say that, well, it's the corrupt government's responsibility and fault, then you are just part of the problem, not part of the solution. Just imagine everyone pointing fingers and grabbing for themselves. That's what brought us here in the first place isn't it? And if the mine bosses did their job properly, they wouldn't have this problem in the first place. I rest my case.

      yvonne.joseph.1612 - 2012-09-11 09:41

      Why don't ministers each give up 1 official car ,and 1 official house,this will raise about R300 million to give to miners. Politicians will still have 1 car and 1 house

  • walter.mureyi - 2012-09-09 19:23

    how can you work for life to keep yourself in dire straits. those areas are not even developed then where is the cash going..........maybe to build a New York of Nkahla just worried

  • frank.kistler.31 - 2012-09-09 22:30

    I too work for a mining company in rtb,not for lonmin tho....eish we gonna see retrenchments there in a big way unfortunately :(

      dexter.morganson - 2012-09-10 09:14

      No doubt they'll retrench the people that WAS actually at work during this time, the rest will most likely still stay there.

  • winifred.watson.9 - 2012-09-10 09:15

    South Africa is in a huge crisis at the moment. This is a tip of the iceberg. People are stricking and protesting at a drop of a hat. Every day we are hearing of fraud and corruption and frankly now people are finding the pinch a little hard to bear. Just about everything has gone up, our backs are breaking from the strain. People are also starging to get fed up with racial discrimination in the work place, after 18 years now if that has'nt given the majority a platform then they are never going to step up. There are a lot of the majority who have become ceo's managers etc and these are the guys that are starting to discriminate. Why, after all these years start by employing the best candid for the job. White South Africans are being snapped up in other countries because they have capabilities yet in their own Country they are virtually black listed. Its time now to take a very good look around us and start to fight for what is right. Seems Goverment is to busy with other things, they are not interested in what is actually going on under their noses. Only thing they worried about the elections at the moment.

      dexter.morganson - 2012-09-10 09:27

      Government is aware of what's going on, they are the ones that implemented it! You can see that even from something as simple as labor laws which is entirely against International labor laws and even the constitution of this country. Where the minister can make "thresholds" based on income as to who can and who can NOT be protected and covered by something as small as the BCEA(Basic Conditions of Employment Act). It rules out the entire middle class. The Rich is protected, anyone knows that already and the poor is "protected" by this "BCEA" i.e Overtime, Sunday time, Daily weekly and Monthly hours worked etc. The ones that aren't protected by it are people that earn more than 180K a year that is, the middle class. Aren't White people middle class? So the international companies can steal our money and do us in with overtime, Sunday payments, Holiday payments even hours worked in a month and not anything can really be said about it because the "Threshold" as implemented by the criminally insane Minister of Labour. Against ILO and the constitution!!! That's just a small example, then we're not even talking about the most obvious ones.

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