Lonmin boosts productivity after ditching mechanisation

The decision to revert to conventional mining methods has helped Lonmin improve productivity levels, after mechanisation failed to yield results.

Lonmin mechanised its platinum mines in 2004 under the leadership of then chief executive Bradford Mills, but in 2008 Ian Farmer, who took over howa ball mill worksfrom Mills, reversed the decision, saying the company had failed to significantly improve productivity at its mechanised mines and would revert to conventional labour-intensive mining.

Mark Munroe, Lonmin’s executive vice-president of mining, said last week that the dependence on mechanised mining had meant that it took longer for mines to reach full production: while it took six years for a standard mine to reach full production, it had taken 10 years at Lonmin.

“It (mechanised mining) set us back significantly,” he said. About R1.3 billion had been spent on the Saffy mine, which now uses conventional stoping mining methods, and it was expected that another R300 million would be spent to take it to full production.

Munroe was speaking last week during a sponsored media visit to the Saffy mine in North West. Lonmin had dealt with geological instability underground by introducing an improved support system.

Saffy employs more than 3 000 people and has had no fatalities since opening 12 years ago.

Lonmin, the third-largest platinum producer, offered the Association of Mineworkers and Construction Union (Amcu) limited organising rights this year. “Amcu membership is predominantly at Karee mine where it has an office. There is a slight representation on other mines,” Munroe said.

This limited right was offered after Amcu members boycotted overtime at Karee. The National Union of Mineworkers (NUM) lost members at Karee after a branch leadership dispute led to an illegal strike in which 9 000 employees were dismissed last year. About 8 000 were rehired.

Lonmin has successfully managed labour unrest, unlike Impala Platinum, which lost R2bn in production following a six-week-long strike that was triggered by rivalry between NUM and Amcu.

The challenges in the platinum sector had forced Lonmin to review its business and it would inform the market of any changes in the next few months, Tanya Chikanza, the investor relations officer, said last week.

The drop in platinum group metals prices, rising costs of producing platinum, the euro crisis and labour unrest have made mines uneconomic. Last month, Aquarius Platinum said it would mothball two operations. In May, Eastern Platinum said it had cut funding to its Mareesburg project and Kennedy’s Vale concentrator plant in South Africa. Lonmin fell R1.49 to close at R94 on Friday.