THE BOTTOM LINE
Now galloping in the desperation stakes, Lonmin
At least 20,000 jobs could be lost at struggling platinum miner if Sibanye takeover fails
There was just the slightest whiff of desperation in the Lonmin interim results presentation on Monday when executives spun the narrative about how wonderfully adept the struggling platinum miner was in staying net cash positive.
The overriding theme of the presentation of the poor results was the absolute need for the R5-billion, all-share takeover by Sibanye-Stillwater to proceed, with pressure coming from Lonmin executives on the government, its agencies, labour and communities to please stay out of the way of the transaction the company needs to save at least 20,000 jobs out of the 33,000 positions it has now.It was a theme that was touched on repeatedly, with chief financial officer Barrie van der Merwe’s blunt assessment that the roughly R220,000 cost per head in the three-year programme to cut 12,600 jobs was simply unaffordable in the prevailing market where the group’s mines were marginal at best and the cash held in the bank was simply not enough to sustain the company.
Lonmin, with a history dating back more than a century, has its back against the wall. Without the Sibanye deal it is in trouble. Van der Merwe suggested business rescue could be an option, while urgent asset sales of highly sought-after parts of the company would be the other.
Whichever way the rest of the year unfolds for Lonmin, the world’s third-largest platinum producer will cease to exist in its current form by this time next year. It will either be a Sibanye subsidiary, assuming that company’s shareholders decide the loss-making group is worthy of owning, or in business rescue or a shadow of itself. It’s an ignominious end for a once powerful player.