Platinum miner Lonmin has given the Farlam Commission of Enquiry’s report into the August 2012 events at Marikana, in the North West, its detailed consideration and has taken full account of the recommendations applicable to the company, Lonmin says.
President Jacob Zuma in June released the report, investigating the killing of 46 Lonmin employees by State police during a strike near Lonmin’s Marikana mine on August 19, 2012.
In a statement, Lonmin maintains that much work has been undertaken over the past three years to build a more open, transparent and mutually trusting environment within the company and to make Lonmin a safer and better place to work.
Particular emphasis has been placed on living conditions and employee indebtedness. This is in addition to the assistance rendered to the widows and children of the employees who died, the company notes.
“Lonmin hopes that all stakeholders take lessons from the tragic events to ensure that such a tragedy does not happen again in South Africa,” the company says in a statement.
Meanwhile, on July 22, Lonmin announced that its board had taken a decision to reduce high-cost production in an oversupplied market by carrying out the orderly closure of the Hossy and Newman shafts at Marikana to safeguard the long-term interests of Lonmin’s shareholders, employees and all key stakeholders.
The Lonmin board announced this as part of its decision to further reduce the company’s cost base in the current pricing environment so that it would be able to sustain a viable operation even if the current metal pricing environment continued for some time.
Since the release of Lonmin’s interim results in May, the platinum price has fallen by 14.4% from $1 126/oz as at March 31 to $964/oz as of July 22.
Lonmin is highly geared to platinum-group metals prices. At current metal price levels, the company has negative earnings before interest, taxes, depreciation and amortisation. Lonmin’s cost minimisation plans are designed to improve this position as much as possible, states the company.
Lonmin’s objective is to preserve value for its shareholders, including employees and communities, as well as to put the company in a position where it can prosper when the metal prices improve from the current depressed levels.
Lonmin’s management has worked to contain cost increases and it remains confident that it will produce at a unit cost within Lonmin’s cost guidance for the full year, which already includes expected savings.
Lonmin states that it is reviewing the appropriate capital structure for the company in the new pricing environment as it considers the need to refinance Lonmin’s debt facilities.
“The board is considering the full range of options available to secure long-term capital and expects to provide an update by the time of Lonmin’s full year results in November 2015,” the company concludes.