With the platinum price declining to below $1 000/oz, about 50% of the platinum industry is currently making losses, which is one of the main reasons why platinum miner Lonmin has had to implement a voluntary retrenchment programme for 6 000 of its workers, explains company CEO Ben Magara.

“This year, 3 136 employees have left our organisation by accepting voluntary severance packages because they accepted the realities of the business and what they needed to do,” he states.

Magara says that discussions with unions about its restructuring programme have been “constructive” to date.

“One year ago, the engagements that Lonmin is having with its unions currently would have been unthinkable. One never expects unions to fold and accept job losses because it is not in the interest of their members or [nor in their interests],” he comments.

Magara says the company has worked very hard on making sure that, through direct engagement with its unions and employees, all stakeholders have been made well aware of state of the platinum industry and of the challenges that Lonmin is faced with.

“We have emphasised to unions and employees that some jobs will have to be sacrificed to ensure we can protect the majority of our employees’ jobs,” he highlights.

Shaft Closures
The company’s Marikana mine’s Hossy and Newman shaft complexes, in the North West, are to be closed within the next two years to “reduce high-cost production”.

Magara says that, since early 2014, the company planned to close the Newman shaft because its minable reserves were depleting and it was therefore nearing the end of its mine life. “The shaft has possibly eight months to one year remaining,” he notes.

Magara says the Hossy shaft has 18 to 20 months of immediately available reserves, which are developed and ready for cash harvesting.

“We will redeploy the mining crews from these depleting shafts to K3 shaft, which we are deepening to 26 Level; and to Rowland shaft, where we will require MK2 resource development crews; there will also be a need for four or five mining crews to open up further levels at Saffy shaft,” he states.

Modernisation Push

Further, Magara emphasises that the local mining industry needs mechanisation. However, he says this is very challenging in the platinum sector, owing to its narrow reefs and tabular orebodies. “Therefore, the extent to which platinum mines can be mechanised is limited.”

Nonetheless, Magara believes that mining companies’ mindsets have to change to ensure they modernise their businesses, including modernising work practices and operating models to ensure optimal extraction value is achieved.

“We have applied the theory of constraints to the Rowland shaft and it is now being applied at 4B shaft and Saffy shaft. This theory entails debottlenecking the process by ensuring maximal work flow rates, cages and chairlifts are at their best and that logistics systems are operating effectively,” he concludes.