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World's second-largest platinum producer envisages massive layoffs

Xinhua, May 8, 2015 Adjust font size:

Lonmin Plc, the world's second- largest platinum producer, announced on Thursday it plans to retrench 3,500 workers in a bid to reduce cost.

The cost reduction is aimed at protecting the company and its employees against persistent low Platinum Group Metal ("PGM") prices, a company statement said.

Consultations with unions and employees are currently underway. Proposals under discussion would lead to 10-percent reduction in labour cost and equates to around 3,500 people.

This reduction should hopefully be achieved through a voluntary process, the company said.

Lonmin hopes to be able to complete this process without needing to make forced retrenchments, which it regards as a last resort, said the company.

"The mining industry is going through another challenging economic cycle and we need to make difficult decisions to maintain the resilience of our business and protect employment," Chief Executive Officer Ben Magara said.

"Our cost controls so far have been encouraging but the price of our metals is beyond our control and we need to make further savings, including seeking voluntary reductions in our labour force which represents around 60 percent of our total costs."

Magara acknowledged that these are tough conversations but he was encouraged by the employees' appreciation of the situation.

"That is a reflection of the huge effort all parties have made to understand one another better in recent months and we are all seeing the benefit of that now," he said.

"Nobody wants this, but we all have to protect the future of the business for as many employees as possible. I hope that we can do this together, for the benefit of the majority. Better times are ahead, but we need to get from here to there."

The Lonmin Platinum Mine in Marikana, North West Province was put on the spot light in August 2012 when 34 miners were killed and more than 78 others injured during clashes with police. The incident was believed to be the worst mine tragedy in post- apartheid era. Endi