A Lonmin project –
but now production
is being threatened
 
Johannesburg, South Africa — MININGREVIEW.COM — 04 November 2008 – Lonmin Plc – the world’s No. 3 platinum producer – has advised trade unions of possible lay- offs due to a big drop in demand for the metal from car makers.

Claiming this here, South Africa’s Solidarity trade union spokesman Jaco Kleynhans quoted Lonmin as saying in a letter dated 24 October that it would present a revised structure of a “more effective and smaller Lonmin” to its employees, but gave no further details.

Meanwhile the company’s London-based spokeswoman Alex Shorland-Ball declined to confirm whether it had issued a notice to unions, but repeated that Lonmin was currently evaluating its mines, and would speak about the process later this month.

Reuters reports that analysts have said the company should consider mothballing one of its mines to avoid losses owing to low metal prices. It was unclear how many jobs would be affected.

“It is very clear in their letter that they need to reduce their staff. They will offer voluntary packages and also say they may resort to retrenchments,” Kleynhans said.

The country’s biggest miners’ union – the National Union of Mineworkers (NUM) – said it would resist any attempts by Lonmin to lay off its members. “We won’t accept any proposal to retrench our members,” said NUM spokesman Lesiba Seshoka.

“We are in the middle of a review of our operations, looking at ways to add value, and we won’t be reporting back on that until the 18th of November,” Shorland-Ball said.

Lonmin – target of an aborted takeover bid by Xstrata – said last week that the review by new chief executive Ian Farmer would be focused on “achieving low cost production, rather than maximising volume”.

Lonmin joins various mining companies in South Africa that are taking a fresh look at their prospects due to weak metal prices, in the wake of a global credit crunch that threatens growth.

Solidarity spokesman Kleynhans said the union was worried because various South African mining companies were contemplating job cuts in the face of sagging metal prices. “We are expecting notices of lay-offs from other companies. They are all going to go into a cost savings mode,” he said “The Lonmin notice is the first, but it won’t be the last one,” he added.