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South Africa’s AMCU union to start wage talks with platinum firms next week

7 July 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – The largest union in South Africa’s platinum industry said on Thursday it would be demanding higher wages for its members when it begins wage talks next week with Anglo American Platinum, Impala and Lonmin.

The union will seek a net salary of 12,500 rand ($853) as minimum wage for its lowest paid members who now take home around 8,000 rand or a 56 percent increase, and a 15 percent hike for higher paid employees when the talks start on July 12.

“At the rate that inflation is running I think surely we should push every worker in the mining sector to be (earning) 12,500 rand,” AMCU’s president Joseph Mathunjwa told reporters, adding that he would push for a one-year wage agreement.

The platinum firms did immediately respond to requests for comment.

While South Africa is by far the world’s largest platinum producer, the industry has been squeezed by rising costs, labour unrest and plunging global prices for the commodity.

Demand for the metal used to build emissions-cutting catalytic converters in automobiles has also been tepid.

The union made similar pay demands during the platinum wage talks in 2014 as well as in the gold sector in 2015, saying it was seeking “a living wage” for its members.

In both instances the hardline union was unsuccessful, which triggered a record five-month work stoppage in the platinum sector in 2014. The union did not hold a pay strike in 2015.

The companies are still recovering from the 2014 strike with Lonmin and Implats forced to raise cash from investors and Amplats hastening its mechanisation drive through sales.

“We will be approaching these wage negotiations with both parties respecting each other because they know what we are capable of,” Mathunjwa told Reuters.

This year’s wage-bargaining season has kicked off in the power, automotive and mining sectors, with some demands ranging from 13 to 20 percent, far above the current inflation rate of 6.1 percent.

($1 = 14.6545 rand)

 

(By Zandi Shabalala. Editing by James Macharia)

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Lonmin will not shy away from merger or takeover

10 February 2016 Comments (0) Africa, Business, Latest Updates from Reuters

CAPE TOWN (Reuters) – Platinum producer Lonmin will not “shy away” from any merger or takeover but for now the company is focused on its plan to survive tough market conditions, its chief executive said on Tuesday.

Like its peers, Lonmin is battling sharp falls in commodities prices amid a supply glut and slowing demand growth in top consumer China. Its share price has tumbled by more than 95 percent since the start of 2015.

This has led to market speculation about a possible takeover of the 107-year old company and some analysts have said efforts so far to turn the company around were not enough despite cost cuts and a deeply discounted rights issue in December.

However, no concrete news has emerged.

“We are continuously looking at options to maximise value for our shareholders and all other stakeholders. Should it be of benefit to our shareholders and stakeholders it’s not something we would shy away from,” CEO Ben Magara told Reuters at a mining conference in Cape Town when asked if he would consider takeover offers.

He declined to say if Lonmin was in any talks with any potential parties.

The price of platinum has fallen about 30 percent year-on-year, forcing miners to sell assets and cut production and jobs. Around two-thirds of the industry, whose mines were damaged by the five-month strike in 2014, are making losses.

Magara said the company was for now focused on turning cash positive in a low price environment – which involves closing high-cost shafts and cutting jobs.

“That’s what I am worrying about. The investors have given us money and we must deliver. Investors are asking if we are going to deliver on this,” Magara said.

Hurt by a prolonged 2014 strike, rising costs and the plunging platinum price, Lonmin raised $400 million through a cash call in December.

The rights issue was undersubscribed even though it was deeply discounted, forcing the company’s underwriters to buy shares in the company and showed that investors were losing faith in the beleaguered mining sector.

The shares were priced at just a penny each on Nov. 9, a 94 percent discount to the stock’s previous session closing price of 16.25 pence on the London Stock Exchange

“I have no doubt that there will be pressure on us when we finally start making money. Will we go and put it in a project first or will we pay investors?” Magara said.

“I think it’s important that investors will get their money back first. They deserve it.”

Lonmin has said it will continue to review its services and reduce costs, mainly through job reduction, as the slide in the price of its main commodity bites further.

“We have seen cycles come and go and I suppose this shall pass but I have to admit, it’s one of the worst I have seen,” Magara said.

 

(By Olivia Kumwenda-Mtambo, Editing by James Macharia and David Evans)

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Platinum producer Lonmin cuts jobs and costs

28 January 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Lonmin said on Thursday it would continue to review its services and reduce costs, mainly through job cuts, as the sliding price of platinum bites further.

The company said labour costs fell 194 million rand ($11.8 million) in the last three months of 2015 after it shed 5,077 jobs, or 84.6 percent of its planned reduction in headcount.

“Progress continues with the restructuring programme due to the new benchmarked operating model and removal of high-cost production to ensure the business remains viable,” Lonmin said in a statement.

It is targeting savings of 700 million rand in 2016.

Hurt by a 2014 strike, rising costs and a plunging platinum price, Lonmin raised $400 million through a cash call in December which failed to find favour with shareholders and priced shares at about a penny each.

Some of the proceeds of the rights issue were used to pay down debt, leaving the company with $69 million in cash at end of December.

The miner said production of refined platinum reached 171,441 ounces in the three months to the end of December, up 22.6 percent from a year earlier.

The price of platinum has been on the decline for about five years. It fell 26 percent last year and is trading at less than half its 2011 peak.

Shares in Lonmin have lost nearly all of their value over the last year. It was the worst-hit of three top platinum miners by the 2014 five-month labour stoppage.

Lonmin maintained its full-year production guidance of 700,000 platinum ounces and its capital expenditure plan of $132 million despite projecting sustained weaker metal prices.

($1 = 16.3897 rand)

 

(Reporting by Zandi Shabalala; editing by David Clarke and Jason Neely)

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Lonmin shareholders provisionally approve crucial rights issue

19 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – Lonmin shareholders provisionally approved the company’s deeply discounted $407 million share issue on Thursday, its chairman said, as the beleaguered platinum producer seeks cash to stay afloat.

Battered by strikes, rising costs and weak platinum prices, South Africa-focused Lonmin said last month it also planned to raise another $370 million in loans to refinance debt currently due in May 2016.

The final results of the votes will be announced later on Thursday, Chairman Brian Beamish said after the shareholder meeting in London.

The loss-making platinum producer had asked its shareholders to vote on five proposals, including consolidation of Lonmin shares. Shareholders also provisionally authorised its directors to allot new shares.

Lonmin shares have plunged more than 90 percent this year and the company has written down $1.8 billion off the value of its assets.

The scale of Lonmin’s plight was illustrated on Nov. 9 when it priced its rights issue at just 1 pence a share – a huge discount to the stock’s previous session closing price of 16.25 pence on the London Stock Exchange.

That meant investors would have to buy 46 new shares for every one they already hold, just to retain their current stake in percentage terms.

Analysts said the low price was a strategy to force shareholders to take up their entitlement or risk having their investment in the company heavily diluted.

Lonmin had warned that if it doesn’t raise the cash it needs, its shares could be suspended.

“We had no choice but to vote in favour because we will be wiped out if this doesn’t go through. But does that mean we will be with the company in the next 10 or even two years? We don’t know,” Anthony Guildford, a Lonmin investor since 1969, said.

Some investors, including pensioners, raised concerns about the consolidation of shares.

“There had to be a better idea than consolidation. I will never see my money (14,500 pounds in shares) back at 6 pounds where I bought … They were 1.70 last Christmas!,” one investor said.

Lonmin’s London-listed shares were down nearly 5 percent at 9.74 pence by 1127 GMT.

The company has said its share sale has been fully underwritten.

South Africa’s Public Investment Corporation (PIC), which owns about 7 percent of the company, has committed to buying its full entitlement and has sub-underwritten a material portion of the issue, over and above its entitlement, Lonmin said.

Lonmin still has to convince the wider market it can be a viable business with platinum prices near seven-year lows below $850 an ounce, hobbled by slowing demand in top consumer China and as the Volkswagen’s emissions-cheating scandal weighs on platinum market sentiment.

The metal used in emissions-capping diesel auto catalysts and jewellery is on track for a 30 percent decline this year, its third consecutive annual fall.

This would be Lonmin’s third rights issue in six years after it asked for cash from shareholders in 2009 and 2012 to shore up its balance sheet.

Lonmin was hit hard last year by a five-month strike in South Africa’s platinum belt – the country’s longest and costliest – because, unlike peers such as Impala Platinum and Anglo American Platinum, almost all its operations were in the strike-affected area.

(Writing by Olivia Kumwenda-Mtambo; Editing by Veronica Brown and Susan Fenton. By Atul Prakash and Clara Denina. Reuters)

 

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Lonmin faces collapse if shareholders reject $400 mln cash call

4 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Lonmin, world’s No.3 platinum miner, urged shareholders to approve a $400 million equity cash call at a meeting next week, saying in a document posted on its website the injection was crucial to its survival.

Lonmin’s shares in London fell 6.8 percent to 23.93 pence by 1223 GMT. The Johannesburg-listed stock was down by 8 percent at 5.00 rand.

Battered by strikes, rising costs and weak platinum prices, Lonmin said last month it planned to raise the money and another $370 million in bank loans to refinance debt due in May 2016.

The firm, founded in 1909 as the London and Rhodesian Mining and Land Company, said that if shareholders do not approve the rights issue at a meeting on Nov. 19, lenders would not provide the loans to push back the maturity of the 2016 debt to 2020.

“As a result, the group may have to cease trading at some point between December 2015 and May 2016 and shareholders could lose the entire value of their investment,” the company said on its website.

Lonmin was hit harder than other producers by the platinum mining strike in 2014, South Africa’s longest and costliest, as unlike its peers, virtually all its operations are concentrated in the strike-affected Rustenburg area.

To try to turn around its fortunes, the miner announced a plan in July to close or mothball several mine shafts, putting thousands of jobs at risk. It employs around 38,000 staff, including contractors.

 

SOME SUPPORT

The cash call has the backing of Lonmin’s third-largest shareholder, the Public Investment Corporation (PIC), which has said it was willing to take up more than it is entitled to. The South African government-owned PIC owns about 7 percent of Lonmin.

The company said the Bapo Community, which owns 2.24 percent of its shares, would also back the rights issue.

Other top four shareholders in the company include South Africa’s Kagiso Asset Management, Capital World Investors and Old Mutual Investment Group.

Lonmin said the new shares would be issued at a “significant discount”, underscoring a more than 80 percent tumble in its stock price over the past year.

“We see this as a particularly stark warning by Lonmin but it is a reminder of the extreme pressures faced in the South African platinum industry,” Investec said in a note.

Spot platinum has fallen by about 20 percent over the last year to levels last seen in 2009 due to oversupply concerns and slowing demand in top consumer China.

 

(Reporting by Zandi Shabalala; Editing by Tiisetso Motsoeneng and Louise Heavens, Reuters)

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