By Felix Njini, Bloomberg
The Association of Mineworkers and Construction Union (AMCU) has asked antitrust authorities to stop Sibanye Gold’s purchase of the struggling platinum miner should the new company intend to press ahead with more than 10 000 job cuts.
Lonmin has proposed 12 459 job cuts at mines that will run out of commercial deposits in the next three years. That’s an “inflated” target, AMCU told the Competition Tribunal, which is hearing public comments on the deal.
Lonmin has already cut about 2 000 jobs to weather a rout in platinum prices.
The magnitude of the planned cuts “warrant that the transaction be prohibited,” AMCU said in submissions to the tribunal. The union also said that the outlook for platinum-group metals has improved and a weaker rand means Lonmin could operate profitably.
If the merger doesn’t take place, Lonmin would require $450m to $500m to remain in operation, chief financial officer Barrie van der Merwe said at the tribunal hearing on Monday. The company isn’t in a position to return to the market to raise more capital, he said.
The Competition Commission has recommended the acquisition, clearing a key hurdle for the deal, on condition that Sibanye tries to save about 3 700 jobs if prices improve and the company can maintain production costs at some shafts. The tribunal is expected to give its final ruling on the matter once public submissions are concluded.
Sibanye’s acquisition of Lonmin is the latest in a series of deals by chief executive officer Neal Froneman, who has transformed the gold miner by expanding into platinum-group metals.
For Lonmin, the deal comes after the company struggled through years of losses and was forced to seek debt-covenant waivers from lenders. Sibanye shareholders may vote on the deal in January if the tribunal grants final approval of the transaction this year, Froneman said.
AMCU said that Lonmin’s $200m metals-purchase agreement with Pangaea Investments Management improved the company’s liquidity, and that Lonmin is “in no danger of exiting the market in the immediate future”.