Just as Lonmin Plc Chief Executive Ben Magara puts out one fire, another one lights up. After Lonmin spent 70 percent of its cash in the last three months of 2016 following a labor dispute at the platinum miner’s biggest shaft, Magara, 49, donned a hard hat and mining overalls to meet workers every day in February to ease tensions. The efforts proved successful and he reported in March that production was back on track.
But the relief was shortlived. Violent community protests around the company’s Marikana operations forced it to temporarily close two smaller shafts last week, amid concerns for workers’ safety. A bus was later set on fire.
The protests are just the latest in a litany of social and labor disputes threatening to overshadow Magara’s turnaround efforts when Lonmin publishes half-year results on Monday. The South African platinum producer, which last reported an annual profit in 2013 and has seen its share price decline about 97 percent since then, is under growing pressure to prove it can make money.
“Lonmin appears to suffer from these kind of disruptions more than most,” said Marc Elliot, a London-based analyst at Investec Plc who has a sell rating on the stock. “The effects perhaps seem worse because its operations are concentrated in one area and, given its cash burn, every ounce of production lost really hurts.”
Lonmin had lost the equivalent of about 40 million rand ($3 million) in output through Wednesday since shutting its E2 and E3 shafts on May 3. Protests continued despite a court order, and a community delegation presented demands including the creation of 1,000 permanent jobs and access to mine certain areas.
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