[miningmx] — LONMIN is facing the daunting prospect of having to ask its bankers
for some leniency on its loan conditions, or requesting shareholders for a capital
injection, while at the same time its main operating asset is standing idle with no
certainty as to when this would start generating income again.
The company has given up issuing ultimatums to get its 28,000-strong workforce
back to work, admitting its employees would need some time to come to terms with
last week’s violence at the Marikana mines which claimed the lives of 44 people.
When Lonmin and other industry roleplayers – including the Minister of Mineral
Resources Susan Shabangu and leaders of trade unions NUM, Uasa and Solidarity –
met over the weekend to discuss the way forward in the context of last week’s
events, the miner thought it had the support of all concerned to expect workers to
return to work on Monday.
However, the main protagonists of last week’s events, the Association of Mining and
Construction Union (Amcu) representing some 3,000 rock drill operators, said on
Monday its members wouldn’t return for work until salary demands were met,
adding these workers were also in need of counselling. Amcu was excluded from the
weekend’s talks.
Other members of Cabinet, including Police Minister Nathi Mthethwa, have also
indicated they didn’t think the ultimatum was a good idea. “The President [Jacob
Zuma] has declared this week as a mourning week,’ Mthethwa said on Monday,
according to Sapa. “We want all, including mine bosses, to respect this.’
Lonmin on Tuesday admitted defeat when only a third of its employees heeded the
latest ultimatum.
“The government of South Africa, Lonmin and the unions are in agreement that the
best way to start to rebuild trust is to return to something closer to normality,’ the
company said in a statement. “Given the traumatic events of the last 10 days this is
a delicate process and it will take time for people to come to terms with what has
happened.
“In consultations with ministers and unions, Lonmin agrees that no disciplinary
action be taken against those unlawfully away from work who do not return this
week.’
Based on earlier indications given by the company, it is losing around 2,500 oz of
platinum production per day, implying a loss of 35,000 oz over a 14-day period. This
is equal to $52.5m in revenue, but the eventual loss could be considerably more
pending the duration of the ramp-up phase once workers have returned.
As a result of the interruption, Lonmin said it was unlikely to meet the covenants of
its debt facilities at the next test date on September 30. Lonmin has debt facilities
totalling $945m, of which it had utilised $520m at the interim stage on March 31
this year.
“Constructive discussions are now taking place with Lonmin’s banking group to
address this potential situation,’ the company said. “Alongside these discussions, the
company is reviewing all the options available to strengthen its financial structure,
including possible access to the equity capital markets. The company will make a
further announcement as and when appropriate.’
