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New Lonmin CEO makes radical changes Posted: Tue, 18 Nov 2008 [miningmx.com] -- NEW LONMIN CEO Ian Farmer has introduced sweeping changes, including plans to close the loss-making Limpopo operation as well as cut back on the use of mechanised mining methods on the group’s mines. Lonmin has also passed its final dividend because of “difficult platinum group metals (pgm) and credit markets”, which Farmer believes are not going to change in a hurry. Farmer said: “We do not see a recovery in pgm prices before 2010 at the earliest, and we have no choice but to make radical changes to our operations.” Farmer also announced retrenchments at Lonmin’s London head office and a decision to shift more management functions to South Africa. He said: “It is crucial that, as CEO, I am close to our operations and I will therefore spend around half of my time in South Africa.” Major criticisms levelled against former Lonmin CEO Brad Mills were that he was unrealistic in his insistence on the use of mechanised mining operations in situations where the geology was unsuitable, and that he spent too much of his time in London. The changes now being made bear out predictions made by JP Morgan analysts Steve Shepherd and Allan Cooke. In a research report released when Farmer was appointed, they indicated the likelihood he would cut back on mechanisation and take drastic action at the Limpopo mine. Mills was called a “mechanisation zealot” by one of his platinum industry peers, to which he replied that he was proud to be described in those terms. The crunch came in late September when Mills “stepped down by mutual consent”, despite comments just two weeks previously from chairman John Craven that he had the full support of the board. Farmer said on Tuesday that “we have failed to significantly improve productivity from our two fully mechanised shafts and, given the resultant high cost of production, we have taken the decision to change our approach”. There are now plans to switch to a hybrid mining system at the Saffy shaft using conventional stoping methods for mining the ore, but still using mechanised equipment for the development work. The new K4 shaft which is due to come into production in 2010 will also be a hybrid mine. Fully mechanised operations will remain in use at the Hossy shaft, subject to a performance review in September 2009. Farmer has also decided to suspend production from Lonmin’s opencast operations at Marikana with effect from the end of this year, and to put the proposed Akanani mine on “care and maintenance for the short term”. Conversely, Farmer said the Pandora joint venture with Anglo Platinum over which Lonmin has management control was an attractive asset and Lonmin remained committed to the project. Mills had stated last year that Pandora was no longer a core asset for Lonmin because it could not be mined using fully mechanised methods. Click Here to subscribe to our daily newsletter
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