[miningmx.com] -LONMIN continued its gradual remediation today unveiling Ben Magara as its new CEO, an appointment that has drawn praise owing to Magara’s political influence and relationship with unions.
Analysts contacted by Miningmx said Magara was “a solid appointment” with strong technical knowledge, although one said he didn’t know Magara suggesting Lonmin has sought operational skills over profile – a factor perhaps mirrored in the share price which was actually 1.7% weaker by mid-afternoon on Tuesday.
However, it’s Magara’s political influence and working knowledge of unions that is likely to be the biggest drawcard of the appointment.
Magara, who takes the helm at Lonmin in July, is currently head of engineering and capital projects at Anglo American Platinum (Amplats); equally important, Magara has been leading the consultations with Government and unions regarding Amplats’ proposed restructuring in which 14,000 jobs may be imperiled.
“I expect Amplats will take him [Magara] off that position given that there are now some conflicts of interest,” said one asset manager who declined to be named as he had been consulted on the matter.
“Personally, I think he is a solid mining person with open cut and underground mining experience. But he also knows the unions and will provide a good transition because he is a person of colour,” the asset manager said.
Said Sholto Dolamo, an analyst for Stanlib: “A very well-rounded individual. I’m quite positive on the appointment”. Dolamo said he didn’t know Magara “very well”.
Not everyone was convinced. “I hope this isn’t some kind of window dressing,” said Lesiba Seshoka, spokesperson for the National Union of Mineworkers (NUM). “I hope it’s not a case that decisions get taken elsewhere and this is an attempt to score cheap political points,” he said.
The appointment of Magara releases Simon Scott who has been the interim CEO of Lonmin since August and saw through the most turbulent period in Lonmin’s history, one which rumbles on as the investigation into the killing of mineworkers at Marikana continues. Scott will revert to his former post of CFO.
“Simon rose magnificently to a huge challenge following Ian Farmer’s illness and we are deeply grateful to him for his unswerving commitment and his effective leadership in a difficult time,’ said Lonmin chairperson Roger Phillimore.
The appointment will certainly score points with the South African government which has been critical of the dearth of black CEOs in the country’s mining companies (although Magara is a Zimbabwean). Government was not available for comment at the time of writing.
In the past three months, Lonmin has secured $700m in shareholder funds for working capital and its slimmed down capital expenditure programme, improved its operating performance, and has appeared to have calmed working conditions on its shafts following last year’s violent ructions.
The market has not particularly rewarded the company yet. Probably informed by subdued market prospects for platinum group metals, Lonmin’s share price was 5.4% weaker over the last 10 days with Amplats shedding 3.55% while Impala Platinum has gained 1.34%.
