Exclusive: Lonmin CEO denies job cuts plan, says focus is on ramp up

Mon Aug 25, 2014 3:20pm EDT
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By Ed Stoddard and Silvia Antonioli

JOHANNESBURG/LONDON (Reuters) - The chief executive of platinum producer Lonmin denied assertions from mining industry sources on Monday that the company aimed to cut around 5,700 jobs as part of a drive to restore profits after a five-month strike.

"There are no plans like that. Our priority is to ramp up production," Chief Executive Ben Magara told Reuters. He did not provide further comment.

Two mining industry sources, one in London and the other in Johannesburg, told Reuters earlier that the proposed plan would see the closure of four to six of the company's 11 shafts.

The company, the world's third-largest producer of the precious metal used for emissions-capping catalytic converters in automobiles, said in June that the strike and low prices meant "restructuring of our business has become inevitable".

Job cuts could trigger more labor unrest, including potential strikes by the hardline Association of Mineworkers and Construction Union (AMCU), whose members have downed tools in the past to protest against planned lay-offs.

"There will be six shafts closed and 5,700 jobs will go. That is the plan," the Johannesburg source, who declined to be identified, said. Lonmin has a staff of around 27,000.

The source did not disclose which shafts would go but said Lonmin had decided it "could no longer subsidize the loss-making shafts and had to focus on the profitable ones".

A key reason behind the restructuring is the wage settlement reached in June with AMCU to end the strike, which will see its members get pay increases of up to around 20 percent annually for the next three years.   Continued...

A township resident walks past Lonmin's Marikana platinum mine, June 13, 2014.   REUTERS/Skyler Reid