LONDON (Reuters) - Plans to cut around 13,000 jobs are likely to be the biggest obstacle to miner Sibanye-Stillwater (SGLJ.J) winning South African regulatory approval for its proposed takeover of troubled rival Lonmin (LMI.L), the CEO of Lonmin told Reuters.
However, Ben Magara said South Africa’s Competition Commission, which has a mandate to protect employment as well as promote competition, should focus on the jobs being saved rather than those that will be lost.
“When I look at the reality of the industry it’s ‘do I lose 12,000 or do I lose 33,000?’. Those are the tough choices that you actually have to execute otherwise you lose 33,000 jobs,” he said in an interview.
“As much as there may be a likelihood for job losses, the key is also to focus on the jobs we are saving because if we don’t do that we would lose all of them.”
Sibanye-Stillwater said on Thursday it would buy Lonmin for $385 million to make it the world’s No.2 platinum producer, and announced plans to cut about 12,600 jobs over the next three years, with a further 890 positions also at risk.
Layoffs in South Africa are a politically sensitive issue and regulators have in the past placed moratoriums or limits on lay-offs as a condition of deals being approved.
Unemployment in Africa’s most developed economy runs at around 28 percent.
“We don’t see any market share challenges. It’s normally around the need to preserve jobs in South Africa,” Magara said.
A Competition Commission spokesman said each case would be looked at on its own merits, adding it had not received an application yet for the deal.
Sibanye Chief Executive Neal Froneman told Reuters the company had built up a track record of buying assets, doing a small amount of restructuring at senior management levels and saving jobs.
“Our strategy has always been very clear and therefore unless there are unrealistic conditions put on this transaction by the regulators, I suspect our shareholders will support it. They will obviously have to make that call,” Froneman said.
“If the conditions are unduly onerous then our shareholders are not going to approve the deal.”
South Africa, home to the world’s deepest mines, supplies 80 percent of global platinum output. However, about 60 percent of the country’s platinum mining industry is loss-making at current prices, the Chamber of Mines says.
Platinum XPT= prices have tumbled due to bloated supply and falling demand from the automotive industry, where the metal is used in auto catalysts to cut vehicle emissions.
Lonmin, the world’s third biggest platinum producer, has burned through $1.6 billion in cash, raised from investors since platinum prices plunged 60 percent from their peak in 2008.
Reporting by Zandi Shabalala; Editing by Mark Potter