David McKay writes that red flags are being raised over platinum producer Lonmin’s ability to avoid leaking cash notwithstanding a restructuring in which 6,000 jobs were shed last year, and hundreds of millions in rands cut in capital expenditure.  

The lost jobs represented about 15% of its workforce.  Lonmin recently unveiled additional plans to improve its business – described by one analyst as a desperate attempt to “pull on every last lever”, but each with a negative consequence.  Lonmin CEO, Ben Magara, said recently that restructuring efforts at the Rustenburg premises had not been as successful as planned, a setback exacerbated by heavy absenteeism over the year-end holiday period.  In an effort to counter absenteeism, Lonmin is to rehire about 500 contract workers.  Another remedial measure unveiled by Magara is to redeploy certain mining crews from developing activities to mining activities over a period of some six to 10 months.  The upshot is that Lonmin’s Magara is in survival mode in the hope that platinum group metal prices revive.

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