Lonmin discussing cost reductions for sake of company, employees
JOHANNESBURG (miningweekly.com) – Dual-listed Lonmin is in consultations with unions and employees over efforts to reduce costs, in an attempt to protect the company and its employees from persistent low platinum-group metal (PGM) prices.
The company on Thursday said in a statement that it hoped to complete this process without making forced retrenchments, which it regarded as a last resort.
Proposals under discussion would lead to a 10% reduction in labour cost and equated to about 3 500 people. “This reduction should hopefully be achieved through a voluntary process,” the platinum miner noted.
“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. 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% of our total costs,” Lonmin CEO Ben Magara advised.
“These are tough conversations, but I am encouraged by our employees’ appreciation of the situation. That is a reflection of the huge effort all parties have made to understand one other better in recent months and we are all seeing the benefit of that now,” he added.
The efficiencies and savings needed were being implemented from top to bottom, which saw the executive committee headcount reduced by 22%.
“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,” Magara concluded.
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