Lonmin to cuts jobs if strike doesn’t end

By on May 19, 2014

Platinum miner Lonmin says restructuring and job cuts were inevitable, as the world’s third-largest primary platinum producer has undergone a sudden fall in six-month earning, owing to one of South Africa’s longest and costliest mining strikes, writes Krysia Gaweda.

According to a website run by the company, the producers have so far lost R17.5 billion in revenue and workers have forfeited R7.8 billion in wages.

Lonmin CEO Ben Magara states that if there were a further delay and employees don’t return to work, the producer would have no choice but to cut jobs. “The business will have to be restructured with the consequence of job losses”, he said. “We will have a better sense of the take-up towards the end of this month and whether we have the correct mix of skills to enable us to safely restart operations.”

However, even before the strike, the labour-intensive platinum industry was under massive strain, struggling with rising costs and weaker prices for platinum. The strike, which started on January 23rd and has lasted over 16 weeks, has only worsened the current situation and made restructuring that much more urgent, the platinum producer says.

“When the industry went into the strike about 40 to 60 percent of the shafts were not making money already,” Magara told reporters. “The depth of the restructuring will depend clearly on the return to work date and how we will ramp up production. But it would appear that this extended strike led by Amcu (The Association of Mineworkers and Construction Union) has made this inevitable.”

Lonmin saw its underlying earnings for the six months to the end of March, before interest and tax, decline to R351 million from R961 million a year earlier.

According to an internal company memo sent out to employees, the producer says it was anticipating a “mass return to work” at its South African operations and was preparing to restart production.

However, reports of violent actions have hindered employees from returning to work. Two non-striking employees were reportedly killed near Lonmin’s Eastern Platinum mines, whose members were not taking part in the strike, according to the spokesman for the minority National Union of Mineworkers, Livhuwani Mammburu.

Magara states how it was important for miners to feel safe to return back to work. “We have engaged with the government, we have engaged with mine security to ensure that there can be enough visible enforcement and policing,” he said on a conference call.

“We are appealing for peace, we are appealing for tolerance.”

After Lonmin appealed directly to the miners via text message and voice mail to return back to work, the company had “overwhelming support” from employees, Magara said.

Referring to the producer going directly to his employees, union president Joseph Mathunjwa said, “What Ben Magara is doing is not surprising”. “It’s not the first time. The massacre in 2012 the company went past the union and straight to the workers”, he said.

Lonmin has reportedly stated that it would continue to go ahead with plans to end the 15-week strike and reopen mines despite the fact that at least four people have been killed in South Africa’s platinum industry over the last couple days.

“Reconsidering the opening is not an option,” said Happy Nkhoma, Lonmin spokesman. “What we need to make sure is that the employees are safe.”

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