A wobbly balance between jobs and keeping mines afloat
Sibanye-Stillwater’s acquisition of Lonmin somehow has to reduce retrenchments and save the business
The conditions the Competition Commission wants imposed on Sibanye-Stillwater’s acquisition of Lonmin strikes a delicate balance between saving jobs and preserving the business in the long term.
Lonmin is already in the process of cutting 12,460 jobs as part of a restructuring and Sibanye has determined another 855 jobs should be cut to sustain the business.
But the commission estimated 3,189 of the retrenchments arise directly from the merger. Hence it has proposed a condition that the company implement three short-term projects which run up to 2020 to delay some shaft closures and save these jobs.
However, the jobs will not be saved at all costs – 87% of them will be subject to the platinum price rising and the costs of mining being contained.
The commission also proposed that Sibanye embark on an agri-industrial community development programme in the Rustenburg area. The idea is to create an alternative source of economic activity to sustain retrenched employees and the communities in which they live.
The commission’s proposed conditions fit the tough times platinum producers face. The metal price remains close to 10-year lows of $800 an ounce while global oversupply persists and no new drivers of demand are apparent.
Neither Sibanye-Stillwater nor Lonmin’s share prices have reacted much to the news of the recommended approval and indeed they shouldn’t. There are still a few hurdles to clear, the next being the Competition Tribunal, which can, and often does, impose different or additional conditions on large mergers like this one.