SIBANYE-Stillwater expected to cut 5,270 jobs at its Marikana operations as the business, formerly known as Lonmin, following a three-month review of the assets.
The restructuring is not a surprise as Sibanye-Stillwater said on August 29 certain assets in the business were not contributing to the bottom line.
“It is not profitable, significant changes are required,” said Neal Froneman, CEO of Sibanye-Stillwater at the time. “Unfortunately the bottom line for Marikana is that the operations require significant restructuring.”
Commenting today, Froneman said: “The proposed restructuring is contemplated to ensure the sustainability of the Marikana operation, which is not a going concern as an independent entity”. A Section 189 which allows for restructuring in terms of the Labour Relations Act was served today.
An agreement with the Competition Commission not to retrench staff following the formal takeover of Lonmin in June expires on December 7, the company said.
In all, three shafts – East 1 (E1), West 1 (W1) and Hossy – and related open cast mining sections will be affected by the restructuring.
Shafts previously identified as being at risk – 4B shaft, K3 mining into Siphumelele ground, Roland mining into MK2 ground, as well as K4 concentrator, – will continue to operate and would, therefore, help reduce job losses, the company said.
“Overall, the outcome will be a more sustainable business which is able to secure employment for the majority of the Marikana workforce for a much longer period,” said Froneman. The restructuring is less than the 8,000 jobs Lonmin said would be affected when last it discussed right-sizing the organisation, a process that began in 2017, owing to the improvement in platinum group metal (PGM) prices.
Between 2017 and September 2019 the workforce at Lonmin reduced by about 5,944 employees, including contractors from 32,512 to 26,568 people, said Sibanye-Stillwater. Shares in the company were up 3.8% today, just under a rand less than the year to date high of R21.59/share achieved on August 29.
As part of the restructuring, Sibanye-Stillwater would optimise its downstream concentrators, smelter and refineries, including closure of the Eastern Platinum C-stream (EPC) and Rowland concentrator plants and cut back related support services as well as overhead structures of the various shafts and open-cast sections.
During the three months to end-June Sibanye-Stillwater had owned the 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.
Sibanye-Stillwater has targeted aggressive debt reduction in the current financial year ahead of a resumption of dividend payments in 2020.
Commenting during the firm’s year-end results presentation last monty, Sibanye-Stillwater flagged a lower-than-forecast ramp-up of its Blitz PGM project at Stillwater in the US, and said that about 10% of its South African gold production would be out of the money until after the third quarter whilst it worked through a 2017 hedging programme.