https://www.miningweekly.com

Magara seizes Lonmin COO opportunity as he grasps low-price nettle

Lonmin CEO Ben Magara

Lonmin rockdril operators in action.

Lonmin processing plant.

13th March 2017

By: Martin Creamer

Creamer Media Editor

     

Font size: - +

JOHANNESBURG (miningweekly.com) – It’s 7 am. Ben Magara walks in bang on time for our interview. He left home at 4.15 am to be in the gym at 5 am and the office at 6 am.

He has a nice spring in his step as he tells me that he has grasped the COO opportunity in addition to his role as CEO of platinum mining company Lonmin, following the departure of former COO Ben Moolman.

He smiles broadly at the prospect of being able to fulfil a dual role at a company, where he has refused a salary increase for the past three years.

He confesses that his real passion is digging, getting dirty with the guys and getting to the rockface for a company that is sitting on net cash of $50-million, is not in debt and has bank facilities of $300-million available to it.

At the rockface, he loves talking safety, production targets and bonuses.

He notes that as soon as the workforce gets a whiff of those bonuses, a new production rhythm takes over that is of huge benefit for all stakeholders.

“Once they know that it’s about safety and their targets, you’re sorted, and we need to get to that again,” he enthuses in the interview with Creamer Media’s Mining Weekly Online.

Working intensely with labour, Magara wants the workforce to elevate their attendance record above the current 90% level and points to the huge benefits that 100% attendance will bring.

He is chuffed to report that the quarter’s production is turning nicely upwards, buoyed by encouraging new cooperation between his company, the once-hostile Association of Mineworkers and Construction Union (AMCU) and the principal inspectorate of the Department of Mineral Resources.

He is delighted that this production uplift is forcing unit costs down.

He is as keen as mustard to ensure the sustainability of Lonmin Platinum’s platinum assets, which he describes as the biggest and the best on the western limb of the Bushveld Complex.

Four of its biggest shafts – K3, Rowland, Saffy and 4B – contribute 80% of its production; all of these shafts are well capitalised and can still produce at steady state going well into the future.

The promising K4 shaft can be brought back at short notice and E3, which it acquired though the Pandora joint venture with Anglo American Platinum, is the shallowest and thickest of the company’s upper group two (UG2) reefs.

The company's pioneering role in UG2 still stands it in good stead. It is also particularly adept at monetising the chrome that the UG2 contains.

At its concentrator plants and refinery, it achieves industry-leading recoveries.

Against that background, Magara has taken direct hands-on control of all the operations to make sure that Lonmin can deliver what it promised it would, as part of its recapitalisation programme of 2015.

Besides the company being sufficiently financially liquid, its recapitalisation is conservatively premised on low prices persisting.

The aim is to be at least cash neutral in this low-price environment.

Full contract mining involving the purchase of ore at a fixed price per tonne has been introduced at some of the older shafts.

The greatest requirement of its current sustainability drive is the avoidance of safety and labour disruptions.

It is targeting uninterrupted momentum and full workforce attendance, which will achieve cash generation, even in these tough times.

To give reality to that rhythm, the sound of the company’s amazing safety and production song plays appealingly as mineworkers descend underground on chairlifts, bringing smiles to the faces of mineworkers, who sing along about the importance of safety, watchfulness and production achievement.

Lonmin has gone through many challenges. The company spent huge amounts of money on acquiring non-starter assets like Akanani, developing mechanised mining that failed, and then having to invest large sums to return to conventional mining.

It had a strike in 2011, the horrific Marikana massacre of 44 people in 2012 and then the five-month strike of 2014.

It was forced to recapitalise in 2015 and restructure in 2016, which cut the workforce by 6 000 people.

But during part of that tough phase, it showed remarkable resilience by being fatality free for 18 months.

More recently, its new relationship with the majority union had AMCU president Joseph Mathunjwa staging a mass meeting to explain how the rock-drill operators, winch operators and general workers can contribute to Lonmin during the tough period that it is facing, together with the entire platinum-mining industry.

On the need to avoid over supply, Magara points out that Lonmin has cut 150 000 platinum ounces out of the market a year and kept production in the 650 000 oz/y to 700 000 oz/y range.

He has had a long spell of removing high-cost production, slashing capital expenditure and eliminating jobs, which was successfully achieved in full liaison with AMCU – but wants more joint out-of-the-box thinking.

Production picked up impressively after his management team accompanied the principal inspector of the Department of Mineral Resources and representatives of AMCU’s national office and its local branch offices in a tripartite effort to defeat the current low prices and the strengthening exchange rate.

“I’m very encouraged by the positive momentum that is coming through in quarter two. If we continue working as a collective, we’ll succeed,” is Magara’s comment to Mining Weekly Online.

As it commitment to ending platinum oversupply, Lonmin has closed its promising K4 project along with three other shafts.

K4 was producing at 10% of capacity as it ramped up towards being the lowest cost miner on the western limb as a co-extractor of both Merensky reef and UG2 reef.

Lonmin’s biggest single shareholder with 29% of the shareholding is the Public Investment Corporation (PIC), which is the custodian of the pensions of South Africa’s civil servants.

Magara speaks of the PIC being extremely supportive of the London- and Johannesburg-listed company, which employs 33 000 people, including contractors, and touches the lives of 330 000 based on each employee having ten dependents.

The tough new circumstances confronting Lonmin call for adaptive management that ensures delivery, no matter how painful.

Business unusual is the order of the day for Lonmin, which engages in the extraction, refining and marketing of platinum-group metals, on a mining licence that is valid until 2037 and renewable until 2067.

Edited by Creamer Media Reporter

Comments

Showroom

Stewarts & Lloyds
Stewarts & Lloyds

Stewarts & Lloyds today supplies steel and tube, pipe and fittings, valves, pumps, irrigation, fencing, profiling and roofing products. The cash...

VISIT SHOWROOM 
SMS group
SMS group

At SMS group, we have made it our mission to create a carbon-neutral and sustainable metals industry.

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.125 0.159s - 91pq - 3rq
Subscribe Now