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S. African major platinum producer says to go ahead with massive layoffs

Xinhua, May 11, 2015 Adjust font size:

Lonmin Plc, the world's third largest primary platinum producer, announced on Monday that it will go ahead with its plan to retrench 35,000 workers.

"In order to protect the long-term value of the business we have started the process of reorganizing our business," the company said in a statement.

The company is aiming for a 10-percent saving in labor cost through voluntary separation packages and early retirements, according to the company plan.

"This may result in a headcount reduction of around 3,500 people," Lonmin said.

Persistently low PGM (platinum group metal) prices and lower volumes sold due to the smelter outages have resulted in much reduced revenue, partially offset by a weaker rand/U.S. dollar exchange rate, the company said.

Lonmin first announced its plan for the massive layoffs last week. Consultations with unions and employees are currently underway.

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," Lonmin 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 labor force which represents around 60 percent of our total costs."

The National Union of Mineworkers (NUM) has vowed to fight against the retrenchment plan.

NUM "is extremely shocked to hear that Lonmin is planning to cut 3,500 workers", said Erick Gcilitshana, NUM chief negotiator at Lonmin.

The Lonmin Platinum Mine in Marikana, North West Province was put on the spot light in August 2012 when about 44 miners were killed and more than 70 others injured during clashes with police. The incident was believed to be the worst mine tragedy in post- apartheid era. Endi