Lonmin takeover gets the green light with six-month moratorium on job cuts
Sibanye-Stillwater’s all-share takeover bid for the world’s third-largest platinum miner won critical yet highly conditional approval from the Competition Tribunal, clearing the way for the creation of one of the world’s biggest platinum group metal producers.
The final conditions to complete the takeover of Lonmin by SA’s gold and platinum producer are votes of approval by shareholders in both companies and a UK court ruling in favour of the deal.
The transaction is expected to be concluded early in 2019, a slight delay from the target of before the end of 2018 both companies had set.
It will vault Sibanye into second place of world platinum producers and number three palladium miner just a few years after it made its first purchase of platinum group metal (PGM) assets in April 2016.
Lonmin CEO Ben Magara and Sibanye CEO Neal Froneman have both said since the unveiling of the deal in December 2017 that there is a need to consolidate their companies’ platinum assets to secure 20,000 jobs at cash-strapped Lonmin mines and plants after planned retrenchments and closures of old, depleted mines.
“We are confident that the integration of Lonmin's PGM assets and Sibanye-Stillwater's adjacent PGM operations will ensure a more sustainable and positive future for these assets and bring greater stability to the region,” Froneman said on Wednesday.
"Despite our enviable mine to market operations and our positive fourth quarter performance, the fundamental challenges the company faces as a standalone business remain," said Magara.
"Consolidation provides a sustainable solution to the industry’s challenges. Consequently, we firmly believe that the Transaction is in the best interests of Lonmin shareholders and all other stakeholders of Lonmin, providing the company with a comprehensive and more certain solution."
In the tribunal hearing at which the takeover was fiercely contested by the Association of Mineworkers and Construction Union (Amcu), the largest union at Lonmin, and various community organisations, the loss of jobs in the merged entity was a core focus.
In its approval of the transaction, the tribunal said on Wednesday it had imposed a six-month moratorium on job cuts because “this merger involves massive public interest issues involving extensive job losses and impact in the platinum mining region of the North West”.
The tribunal noted there had been confusion and heated arguments about the scale of job cuts, with arguments raging about which were merger related, with Amcu arguing all job losses stemmed from the deal and Sibanye stating that of the 13,334 positions to be cut, only 885 were directly related to the takeover.
Lonmin had said in October 2017 it was going to cut 10,156 jobs and the Competition Commission took the view in its recommendation to the tribunal that the deal be approved that any cuts on top of that should be merger-related.
Sibanye told the tribunal it would place a six-month moratorium on retrenching 1,831 people and would run studies into agricultural programmes, investing in certain Lonmin shafts and setting up a consultative forum to implement Lonmin’s social and labour plans.
Drawing a firm line under the varied number of jobs that could be lost because of the merger, the tribunal imposed a moratorium on all job cuts for six months pending the outcome of a detailed study.
“In order to protect what would be the merger-specific job losses, whether this number be 885, 1,831, 10,156 or 13,344, our view is that Sibanye should be given an opportunity to do an in-depth assessment of the operational requirements of the target firm and to consult with all relevant stakeholders, which include trade unions,” the tribunal said.
Sibanye spokesperson James Wellsted said this would not be problematic for the merger.