Lonmin cuts 20% of workforce
Lonmin slashes its workforce in a bid to keep afloat and to reap the benefits of its business restructuring plan.
|||Johannesburg - Lonmin has cut its workforce by nearly 20 percent in a bid to keep afloat and to reap the benefits of its business restructuring plan.
Read also: Safety stoppages hurt Lonmin's production
The world’s third largest platinum producer yesterday said in a production and business update for the quarter that a total of 19 percent or 6 861 people were axed as at the end of June.
“The period we are reporting on has been marked by complex and competing themes as the operating environment has remained challenging,” the company said.
“Whilst we are pleased with the implementation of our business plan, we have yet to fully harness the associated benefits and productivity gains.”
After battling crippling strikes, rising costs and the low metal price environment, Lonmin cut its headcount and non-profitable production as part of the business plan last year.
It also completed a deeply discounted $407 million (R5.64 billion) rights issue in December in order to survive the difficult market conditions.
Lonmin said that the job cuts had included 5 433 employees and contractors and the reskilling and redeployment 1 428 employees into vacant roles that were predominantly created as a result of a deliberate freeze on recruitment and losses due to natural attrition.
Going forward, Lonmin said it would achieve its sales target of 700 000 ounces this year and expected a return to production targets. “As the disruption created by the employee and contractor rationalisation process settles down, we expect the mining teams to return to the long run target levels of production with the objective of improving cash generation.”
In addition to cutting the workforce, Lonmin had sold its 49 percent stake in West Kenya joint venture with Acacia, one of Africa’s biggest gold producer for $5 million.
“This is in line with our strategy of divesting non-core assets and maximising cash to focus on our core platinum operations”, the company said.
Lonmin expected to achieve unit costs in the 2016 financial year of between R10 400 and R10 700 per Platinum Group Metals ounce.
The company said its capital expenditure guidance remained unchanged at $105m and was committed to getting to the root causes of safety incidents after two fatalities in the period. In terms of the wage talks which begun last month, Lonmin said the discussions were constructive.
“The negotiations have started well and have been constructive as we have been working closely with our employees and unions,” the company said.
It noted that union membership was stable, with Amcu representing 80 percent and 90.7 percent of overall company employees and category 4 to 9 employees respectively.
Amcu has demanded that salaries be hiked by 47 percent to R12 500 for the lowest paid workers.
Lonmin shares dropped 2.49 percent on the JSE yesterday to close at R42.25.
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