Lonmin workers ask South African tribunal to stop merger with Sibanye
South Africa’s Association of Mineworkers & Construction Union (AMCU) has asked the country’s Competition Tribunal to veto the merger between precious metals producer Sibanye-Stillwater (JSE:SGL) (NYSE:SBGL) and struggling platinum miner Lonmin (LON:LMI) to avoid around 10,000 job losses.
The union, Lonmin’s biggest, said the number of Lonmin’s planned job cuts at mines that will run out of commercial deposits in the next three years was “inflated”.
If approved, deal would create the world’s No.2 platinum producer as Lonmin is the world’s third-largest while Sibanye-Stillwater is the fourth.
It added the extent of the planned layoffs “warrant that the transaction be prohibited,” especially as the platinum sector has improved, which together with a weaker rand means Lonmin could operate profitably, AMCU said in its submission to the tribunal.
The Competition Commission recommended the deal in September, but imposed tough conditions for it to move ahead. One of them was that Sibanye should embark on three short-term mining projects to avoid the loss of over 3,000 jobs, subject to platinum prices rising and costs being kept low.
The tribunal, which makes the final ruling on deals, is hearing public comments on the merger and it’s expected to announce its definite decision on the matter once submissions are concluded.
If the merger gets the green light, it would create the world’s No.2 platinum producer. Lonmin already is the world’s third-largest while Sibanye-Stillwater is the fourth.
The 150-million pound deal (about $195 million), has been considered a rescue for Lonmin, severely hit by weak platinum prices, costs related to the strengthening rand, a large labour force and expensive deep-level mines.
For Sibanye, it is just one more of many deals struck by chief executive officer Neal Froneman, who has transformed the gold miner by expanding into platinum-group metals assets, and last year bought a US palladium miner for $2.2 billion.