Lonmin moves to Jo'burg

Brendan Ryan | Thu, 22 Oct 2009 08:59
[miningmx.com] -- LONMIN is to relocate its operational headquarters from London to Johannesburg to improve day-to-day management of the group’s platinum mines.

The move follows years of criticism by analysts that one of the major problems at Lonmin was the remote location of top management in London which meant they did not have a proper grasp on what was happening at the mines.

Lonmin CEO Ian Farmer addressed this situation in part last year after he replaced former CEO Brad Mills when he stated he would be spending most of his time in South Africa.

Farmer will now be based in Johannesburg from January 1 next year “and will spend the significant majority of his time in South Africa from that point onwards.”

Farmer commented, “as part of Lonmin’s continuing transformation now is the right time to start the process of consolidating the executive management team in South Africa.

“This move will bring many benefits as we continue to deliver operational improvements and build on the firm foundations put in place over the last year.”

Lonmin’s chief financial officer Alan Ferguson has decided not to move to South Africa and will resign at a future date. He has committed to remain in his job and on the board until the end of December.

Lonmin chairman Roger Phillimore stressed the board’s key functions of “management oversight, strategic direction, decision-making and corporate governance will remain in London.”

The group announced production results today for the financial year to end-September which show Lonmin achieved its revised 2009 sales guidance of 682,955oz of platinum. The group sold a total of 1.26m oz of platinum group metals (pgm) which includes palladium, rhodium and other minor metals.

The forecast was for sales of between 680,000oz and 700,000oz of platinum. Farmer said 2010 sales should be slightly up on 2009 levels reaching around 700,000oz of platinum.

Farmer said the SA platinum producers were likely to face continued industry-related challenges in 2010 and the decision to relocate to Johannesburg “reflects our determination to drive operational performance more effectively than can be done from London.”

He added, “Section 54 safety stoppages will not stop but we need to reduce their impact on our operational and financial performance.

“South African mining inflation remains relatively high putting pressure on industry margins and capital investment and the labour environment remains challenging.

“Recent improvements in US dollar-based pgm pricing have been offset by South African rand strength and cash-flow management remains a high priority in the industry.

“Against this background we expect that Marikana mining production will grow in 2010 more than offsetting the reduction in opencast tons and ounces from Pandora as these pits are now closed.

“This should allow metals in concentrate production to increase by around 5%. “

Farmer said the latest rebuild of the troubled Number One furnace started on October 10 and the furnace should start to produce metal in late November.

The furnace suffered its latest malfunction in June and had to be run at reduced power for most of the fourth quarter. The production shortfall was made up from running Lonmin’s smaller and less-efficient Pyromet furnaces.