Court dismisses AMCU's job loss appeal on Sibanye-Lonmin merger | Fin24
 
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Court dismisses AMCU's job loss appeal on Sibanye-Lonmin merger

May 17 2019 15:46
Carin Smith

Judge Dennis Davis on Friday dismissed an appeal by the Association of Mineworkers and Construction Union (AMCU) who wanted an aproval by the Competition Tribunal for a merger between mining companies Sibanye-Stillwater and Lonmin set aside.

The Competition Tribunal had approved the merger with conditions in November last year, but AMCU appealed the decision over what it said would be massive job losses as a result of the merger.

The deal will see Sibanye acquire Lonmin for R5.17bn, and has already received the approval of several regulatory bodies, as well as the South African Reserve Bank. The transaction remains subject to compliance with certain conditions and the approvals of Lonmin and Sibanye-Stillwater shareholders and the courts of England and Wales.

The companies say the merger would create a "more resilient company, with greater geographical and commodity diversification" – enabling it to withstand short-term commodity price and foreign exchange volatility. 

Lonmin and Sibanye have also previously said that their merger was necessary due to Lonmin’s strained financial position.

AMCU claimed, however, that the merger should either be prohibited due to the potential for significant job losses or that the six-month moratorium on retrenchments, set as a condition by the Tribunal, be extended to 24 months, among other things.

Davis, however, found that while the courts should not "play dice" with the welfare of workers - especially in a country with high unemployment - the public interest in preventing job losses must be balanced by the public interest justifying it. 

Davis found that, notwithstanding transient fluctuations in the price of Platinum Group Metals (PGMs) and of the rand/$ exchange rate, Lonmin's continued existence was in jeopardy and the number of job losses that Sibanye and Lonmin project as a result of the merger was rational.

This was because in the broader scheme of things, saving Lonmin's precarious financial position also meant saving the vast majority of its workforce.

Davis, therefore, found no misdirection on the part of the Tribunal, but did make a minor alteration to one of the conditions which clarifies the measure used as part of an investigation and implementation of certain mining projects.

READ: AMCU slams Lonmin-Sibanye merger over 'magnitude' of job losses at Competition Appeal Court

"At best, Lonmin would continue to 'tread water', that is, if it was not placed into business rescue, which, if it occurred, would hold significant risk for 32 000 jobs," said Davis.

"It is thus clear that the merger specific job losses - even taking the Commission's figure of 3 189 retrenchments - were vastly outweighed by the potential job losses if the counter factual applied."

Sibanye and Lonmin said in a joint statement that they were pleased with the judgment.

Neal Froneman CEO of Sibanye-Stillwater said the transaction continued to be in the best interest of all involved, while Ben Magara, CEO of Lonmin said the merger creates a larger and more diversified company.

Gerhard Bester, a labour consultant for AMCU told Fin24 they were still studying the judgment.

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