Johannesburg - Lonmin [JSE: LON] plans to retrench 1 139 workers before Christmas, according to trade union Solidarity.
The platinum miner informed the trade union that it plans to retrench 446 workers, and let go of 693 contractors before the end of December, Solidarity general secretary Gideon du Plessis told Fin24.
“This is poor timing from their side,” he said.
Du Plessis explained that the union is concerned that the retrenchment is only the first in a three-phase process that will carry on throughout next year.
According to Solidarity, Lonmin explained that it is facing cost pressures that necessitate the retrenchments.
Ahead of the fifth anniversary of the Marikana massacare in August, CEO Ben Magara shared details of the pressures platinum mines were facing, as 70% of the sector was loss making. These challenges include lower platinum prices, a stronger rand and inflated costs.
He explained that these factors, coupled with the effects of the global financial crisis, impacts the viability of the sector, as well as future investment for development.
“We cannot spend what we do not have,” said Magara. “We pay customers to have our metal, it is not sustainable.”
Lonmin had not paid shareholders dividends since 2011. The company reported an operating loss of $181m for its interim financial results for 2017.
Among other cost cutting efforts, the company has undertaken to reduce it overheads. This has included moving its head office from Melrose Arch in Johannesburg to Marikana in the North West province, where its core mining operations take place, said Magara.
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