Sibanye has an eye on courts, and a strike
While Sibanye-Stillwater and Lonmin await the outcome of an appeal case brought by the Association of Mineworkers and Construction Union (Amcu) to block Sibanye's acquisition of the platinum producer, a labour dispute at Sibanye's gold mines is in its fifth month.
Negotiations between Sibanye and Amcu have stalled on a settlement offer of R4,500.
Shadwick Bessit, executive vice-president at Sibanye, said the dispute was not about increases but a return to work settlement. The company said Amcu had agreed on the R4,500 payment, then reneged.
Amcu has accused Sibanye of removing the R4,500 offer from the negotiation table.
Bessit said: "Due to the fact that the longer the strike takes, the more the costs accumulate with respect to the payment in kind, which is the payment the company makes on employees' behalf towards accommodation and food . thus reducing the amount available for the ex gratia payment. This means the ex gratia payment that was put on the table in February decreased to R2,500 in March and has now gone down to zero."
Amcu president Joseph Mathunjwa told workers on Friday that the union is urging the company to put the R4,500 offer back on the table. Sibanye CEO Neal Froneman "has the power to end the strike. We are saying to Froneman, it is up to you to end the strike." Mathunjwa was addressing workers at a mass meeting at Sibanye's Driefontein Masizakhele stadium.
He added Froneman had told investors that the strike would end on Friday. But Amcu has not suspended the strike.
Amcu is demanding an increase of R1,000 a month over the next three years. Sibanye said an agreement was signed by NUM, Solidarity and UASA for R700 a month increase for the next three years and no further increases would be considered.
Sibanye's acquisition of Lonmin was approved by the competition authorities last year, but a late objection by Amcu has delayed the deal, which is expected to be finalised by June.
An appeal by Amcu to halt the takeover was heard this week in the high court in Cape Town.
Amcu is opposing the deal because it would lead to job losses. The companies said the merger would result in the loss of 885 jobs, but the Competition Commission calculated that 3,188 jobs would be lost.
HB Senekal, a director in the law firm ENSafrica's competition department who is representing Sibanye, said the judgment in the appeal hearing could be handed down in the next two weeks. Sibanye said the merging parties remained "committed to the transaction".
According to Rene Hochreiter, an investment analyst at Noah Capital Markets, the merger between Sibanye and Lonmin is a good move. "I don't think that Lonmin could have carried on much longer on its own. Lonmin has got so much baggage from Marikana," he said.
Lonmin, now the worst-performing platinum producer, has been operating under immense financial pressure amid weak platinum prices and rising costs.
Added to the pressures is the platinum miner's huge debt.
Bessit said Sibanye "as a result of the strike is suffering significant financial losses due to lower production and additional strike-related costs".
The company has said it was losing R10m to R20m a day during the strike.
Hochreiter said even though the company was making losses, "it was only losing money on the gold side".
"Gold wasn't making money anyway, so the strike was probably a lucky thing for Sibanye: five shafts in Driefontein are going and if the strike carries on much longer, they'll probably close all the gold section," said Hochreiter.
Among Froneman's plans is to possibly move its primary listing offshore. James Wellsted, head of investor relations at Sibanye, said: "To remain competitive in the global mining industry, one of the factors we may consider in future is a potential primary listing in another jurisdiction, which could provide easier access to lower cost capital."..