[miningmx.com] – LONMIN confirmed it was in discussions with unions to reduce its workforce in an effort to lower costs.
Ben Magara, CEO of the UK-listed platinum company, said in a statement ahead of the group’s interim results on May 11, that proposals under discussion would lead to a 10% reduction in labour costs equal to 3,500 people.
“Our cost controls so far have been encouraging but the price of our metals is beyond our control and we need to make further savings, including seeking voluntary reductions in our labour force which represents around 60% of our total costs,’ he said.
“These are tough conversations, but I am encouraged by our employees’ appreciation of the situation,” he added.
Bloomberg News said on May 6 that both Lonmin and Impala were in discussions with unions about reducing costs citing Franz Stehring, head of minority union, UASA. So far there has been no statement from Impala regarding its cost reduction methods.
Magara added that cost saving measures extended to the upper reaches of the firm’s management. The executive committee headcount had been reduced by 22%, he said.
“Nobody wants this, but we all have to protect the future of the business for as many employees as possible,” said Magara.
“Better times are ahead, but we need to get from here to there,’ he said. A further update will be provided at Lonmin’s interim results announcement.
Lonmin said in November that it planned to trade out of the current depressed platinum price, a strategy that would see it harvest old shafts, optimise newer ones, and re-deploy many of its 28,000 staff as it sought to save R2bn over the next three years.
Analysts said at the time that the measure fell short of a need to cut production and reduce staff – a decision they said was possibly informed by political factors in the sense that retrenchments would stir the ire of unions at a time of labour instability.
Lonmin said in a separate announcement that it had “noted” shareholders in Glencore had voted in favour of the resolution to distribute the Swiss-based firm’s 23.9% in the platinum company. It added that Glencore’s nominated representatives to Lonmin’s board, Gary Nagle and Paul Smith, had resigned effective May 8.
Brian Beamish, chairman of Lonmin “… thanked Gary and Paul for their constructive input and support to the board” since they joined in September 2013. “They leave with our best wishes,’ said Beamish.
Shares in Lonmin ended just 4.27% lower on the Johannesburg Stock Exchange on a day where resource industry pessimism swept all before it. Shares in Impala were 4.25% down while Anglo American Platinum and Northam Platinum were 5.97% and 2.36% lower respectively.
The biggest sell-offs, however, were reserved for the gold sector. The Johannesburg gold index was 6.45% down led by Gold Fields which was 13% weaker on the day, followed by Harmony Gold and AngloGold Ashanti, shares in which were 8.97% and 3.7% weaker respectively.
