Sibanye-Stillwater to unveil Lonmin restructuring in a month as shafts “not contributing”

SIBANYE-Stillwater would unveil restructuring plans for Lonmin in about a month as there were certain of the former firm’s older shafts that “weren’t contributing to the bottom line”, said Neal Froneman, CEO of the Johannesburg-listed group.

Froneman was responding to questions following presentation of the firm’s interim results in which it posted a loss largely owing to lost gold production as a result of strike action.

In the presentation, Froneman also issued a warning to the Association of Mineworkers & Construction Union (AMCU) regarding a possible strike if wage talks in the platinum sector stalled. Froneman said his company could “… sustain a strike for a very long time as half of our revenue comes from the US”, a reference to the Stillwater palladium and platinum mine.

Sibanye-Stillwater completed the acquisition of Lonmin in May following the approval of shareholders, a process that took 18 months from when the transaction was first unveiled in December 2017. During that time, Sibanye-Stillwater said restructuring was likely. This was despite Lonmin having initiated its own process, potentially affecting 12,000 jobs – about a third of total employed at the company.

Froneman remarked today that conditions imposed by the Competition Commission regarding the takeover of Lonmin did not exclude restructuring by means of a Section 189 proposal as set down in the Labour Relations Act. In any event, the conditions imposed by the Competition Commission only stood for six months from effective date.

“We are now three months into the transaction,” said Froneman. “It is not profitable, significant changes are required. Unfortunately the bottom line for Marikana (Sibanye-Stillwater’s renaming of the Lonmin shafts) is that the operations require significant restructuring.”

This was despite an elevated platinum group metals basket price which was in excess of R20,000 per 4E ounce. Assuming the Marikana shafts produced the same amount of metal, the earnings before interest, tax, depreciation and amortisation (EBITBA) generated would be significantly in advance of the first half of the year, said Robert van Niekerk, head of Sibanye-Stillwater’s South African operations.

During the three months Sibanye-Stillwater had owned Lonmin (Marikana shafts), the company had moved into a net debt position largely because it cancelled an offtake agreement with a third party Froneman said would benefit the company in the long run.

WAGE NEGOTIATIONS

AMCU president Joseph Mathunjwa raised the temperature on wage negotiations in the South African platinum sector on August 13 by suggesting Sibanye-Stillwater’s wage offer of R300 per month extra for Lonmin employees was “shockingly low”.

Froneman, however, was sanguine on the prospect of a strike. He didn’t believe it was favoured by AMCU members, adding that new South African legislation calling on unions to respect secret ballots when union leaders asked for a strike mandate was helpful.

He called on the Commission for Conciliation, Mediation and Arbitration (CCMA), the body that helps negotiate wage disputes, and the Registrar of Labour, to ensure unions adjusted their constitutions to allow for a secret ballot.

Froneman also suggested that the five month strike at the firm’s gold mines was “a very necessary thing” because AMCU members would be aware that a strike would not result in a change to Sibanye-Stillwater wage offers.

The fact that about 80% of platinum mining employees were affiliated to AMCU was also helpful and would help to differentiate the wage negotiation process from that at the gold mines last year, he said.

10 COMMENTS

  1. Very well said Neal, and very well done also. These people need to understand the realities of the world. Firstly, no one is ENTITLED to anything. If you are not happy with the salary you receive, you are free to leave and seek employment where you are paid what you believe is fair and where your contribution is valuable enough to justify such higher pay. Secondly, it is not the role of the company to adjust your salary for inflation in order to sustain your lifestyle, the product is not subject to inflation and therefore company revenues are not either. If you do not agree with this view, refer to point 1. Thirdly, mining is a business like any other and the objective is to make profits. Should this not be the case, you will either close it down or, if you are lucky (like Eskom) you can steal, dish out money to friends and family and live the high life while tax payers foot the bill. Incidentally, as more people lose their jobs, companies keep closing down their businesses in SA and high net worth individuals emigrate, the tax base is shrinking fast…. Soon there will be no more money to steal, pay exorbitant salaries for and inflated civil “service” or pay social grants… Good luck, you are going to need it….

    • *If you are not happy with the salary you receive, you are free to leave and seek employment where you are paid what you believe is fair and where your contribution is valuable enough to justify such higher pay.*
      Workers are also free to go on strike. They have this right and if they wish they may do it.

      • The problem is though that if the Union decides to strike, they intimidate and murder and worker who does not wish to participate. These workers and their families then suffer under the “no work no pay” rule but, guess what? The Union “leadership” get full pay, free KFC and generally a great party…
        The Union leadership should also give up all salaries until the strike is called off. They should also feel the hunger pains, not only the members.

  2. I agree its time to stop demanding and start doing your Jobs the Marikana incident with the relevant union has created the wrong impression the police only did there jobs call a spade a spade

  3. Well done Neal Froneman, real true must be told to mine workers of this country, obout their leaders who are no more into their interests. One of the union leader left the unionists and stands for beeing a political leader. That means he is no more interested in their contributions, he needs more and more can only be taxpayers money which is so easily stolen with no arrest taking plase, which results them as selebrity who will be invited from one commition to the other until they are old and sick to be punished.

  4. [Comment moderated].

    Sibanye-Stillwater is not entitled to South African Orebodies either….If it does not comply with the laws of the land then the Mining Rights will be expropriated/cancelled!

    Those who seem to see anything that seeks to uplift Blacks as entitlement need to have the law book thrown onto their face. Please note , the orebodies do not rot , so if you are unhappy , simply do not invest. Unlike Apartheid government, the current South African government does not hold money hostage in South Africa. Just for the record, unlike the apartheid Government, the current South African government lives within its means ( i.e we will never default on our debts).

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