JOHANNESBURG (miningweekly.com) – Financial services group Cadiz Mining and Resources division head Peter Major has told Mining Weekly Online that the market’s response to the appointment of Ben Magara as Lonmin’s new CEO was “disappointing”.

The platinum miner’s shares were trading at £2.87 at 15:30 in London, down 1.24% on the March 28 close of £2.90.

Lonmin’s shares on the JSE were trading at R40.25 by 16:40, down 2.26% on the March 28 close of R41.18.

“I am a little disappointed as to how the share price reacted to Magara’s appointment, particularly with the stable platinum price. I expected it to increase by around 2% because it is so bombed out right now,” Major commented.

Mining Weekly Online reported earlier on Tuesday that the former Anglo Coal South Africa CEO would occupy the top leadership role at Lonmin with effect from July 1, at which time acting CEO Simon Scott would resume his role as CFO.

Scott was appointed to head up the embattled miner in August after then CEO Ian Farmer became ill in the midst of an international media storm over the deaths of 34 striking miners at its Marikana mine, in the North West province.

While Major believed Magara’s appointment was “a step in the right direction” he said that Magara’s areas of expertise – primarily around capital and engineering –meant that he may not have the hardline production-focused single-mindedness required to accelerate the company’s recovery.

“He doesn’t have a strong production perspective, which is what Lonmin needs at the moment – they need someone who can break rock and get the ore out of the ground,” he said.

He did, however, consider that Magara’s years of employment at large mining companies, most notably the Anglo American Group, meant that he would find the smaller Lonmin easier to manage.

In addition, Major said Lonmin’s decision to appoint a mining engineer rather than a financial expert was well considered.

“At the moment, Lonmin needs someone who understands what can and can’t be done, what is possible and what is not. Mining is such a complex business and it is important to have someone who understands what is going on at the rock face,” he commented.

He added that, on paper, Magara “ticked a lot of boxes” and that, while Lonmin was struggling to recover from continuing labour and production challenges, the appointment presented good prospects for the Zimbabwean national.

“It is not as though they are handing him a poisoned chalice; this is a very good opportunity,” he emphasised.

Magara currently occupied the position of executive head of engineering and capital projects at Anglo American Platinum and had occupied several positions within the Anglo American Group.

He boasted 22 years’ experience in the mining industry had been a director of Anglo American South Africa since 2006, and was a nonexecutive director of phosphates firm Foskor. 

Magara completed a degree in Mining Engineering from the University of Zimbabwe, where he was, in 1990, named the Best Final Year Mining Engineering student.