Loss-making Amplats may shut t

Loss-making Amplats may shut two mines as crippling strikes go on

Lonmin chairman retires and Amplats considers closing Rustenburg and Union mines as platinum miners strike enters its tenth week.

Loss-making Amplats may shut t

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Amid a major crisis stemming from ongoing miner strikes, Lonmin chairman Roger Phillimore has announced his retirement and will step down as director of the platinum-producing company on 30 April.

Phillimore had previously indicated that he would retire sometime this year but the announcement has come earlier than expected. Brian Beamish, who joined the board in November last year, will become interim chairman on 1 May. Beamish initially joined the company as an engineer and has held various operational and leadership roles within the company for the past 36 years.

Of the three major platinum producers in South Africa, Lonmin has been the worst hit by the ten-week miners’ strike because it has had to completely halt its operations, although it has claimed that the change of chairman is unrelated to the current industrial action. Lonmin runs the Marikana mine where 34 striking miners were gunned down by police in 2012.

Meanwhile, Amplats is considering closing its Rustenburg and Union mines because of the continuation of the strike, which has already resulted in the fact that Amplats will be unprofitable this year. Analysts speaking to Business Day warned of the “disastrous” effect on the economy and jobs were the mines to close. Amplats have already had to restructure their operations at their Rustenburg mines, cutting 7,500 jobs and closing two mines in the hope of restoring profit during the strike by 70,000 members of the Association of Mineworkers and Construction Union (Amcu). The Rustenberg shafts account for 22 per cent of Amplats platinum production and employs 28,000 workers when functioning at full capacity.

Speaking last week, Amplats CEO Chris Griffith said: “We think that we had a profitable solution for Rustenburg but it was borderline. Now … a third of the year’s production is gone … Rustenburg cannot make a profit this year.” Griffith also said that were the strikes to continue for just a month or two more then the company would have “no chance” of being profitable in the next two years. “The longer this continues … we’ve got to ask ourselves: ‘At what point in time do we have to shut down Rustenburg?’ That is a conversation we are having internally, we are looking at different scenarios to say ‘When do we shut down Rustenburg?’ The same goes for Union mine.”

Griffith also spoke about the fact that “while the strike continues there’s certainly a very real likelihood we will enter section 189 conversations with labour,” referring to the notices that must be issued to workers by companies who are considering job cuts. “If this isn’t solved in the near term, we will have no choice but to start looking at those options,” Griffith said. “The first ones we are looking at as we speak are Union and Rustenburg. If it continues for longer, then we’ll look at Dishaba and Tumela,” which are two mines near Thabazimbi in Limpopo.

“Ultimately, the final solution for the mining industry must be more mechanised, productive work,” Griffith said. “For us to settle at Amcu’s demands we might just as well shut down Rustenburg and Union now. Giving that settlement, getting everyone back and then having to shut the mines down is lying to people.”

Global platinum prices have thus far remained relatively stable at around $1,450 an ounce thanks to the fact that the market was previously over-supplied, though analysts do not expect this to be true for much longer. “People are getting nervous when they look at this, no matter how much we try to provide confidence into the market,” Mr Griffith said. “People are looking over the fence and seeing this is very noisy and they are worried about it.”