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Last updated: December 28, 2012 2:21 pm
Lonmin, the London-listed platinum company that has been at the centre of the industrial strife in South Africa’s mining sector, has parted company with chief executive Ian Farmer.
Mr Farmer had been on sick leave since August when he stepped aside in favour of acting chief executive Simon Scott after being diagnosed with a serious illness.
The announcement on August 16 of Mr Farmer’s illness came on the same day as clashes between police and striking workers at Lonmin's Marikana platinum mine complex left 34 workers dead in one of the worst episodes of violence in post-apartheid South Africa.
Since then Mr Scott has led Lonmin through the final part of a tumultuous year for the world’s third largest platinum producer.
Amid strikes, a collapse in production and falling platinum prices, Lonmin warned in August that it faced a breach of banking covenants by the end of the year.
September saw striking miners agree a deal to return to work after accepting wage increases ranging between 11 and 22 per cent. But in October Lonmin rejected a takeover approach and calls for changes in senior leadership from top shareholder Xstrata, after launching a $817m rights issue.
Lonmin completed the rights issue in early December without formally conceding to one of Xstrata’s demands that it should nominate a new chief executive. But Xstrata, while dropping demands for the ceding of management control, said it would continue to seek board changes after agreeing to back the rights issue amid continuing concerns over “the destruction of value of our shareholding”.
On Friday Mr Scott ruled himself out of the running to become Lonmin’s next permanent chief executive. Instead, he said he wished to return to his post of chief financial officer once a permanent replacement to Mr Farmer has been appointed.
Lonmin shares fell 2 per cent to 279.6p on Friday, leaving them down by nearly half over the year.
Roger Phillimore, Lonmin’s chairman, confirmed headhunters had been hired to help find a successor to Mr Farmer who, after 26 years with Lonmin, had led the company for the past four years. “We wish him well with his ongoing treatment,” said Mr Phillimore.
The search for Mr Farmer’s permanent replacement comes as Lonmin attempts to cope with falls in platinum prices and rising costs that, compounded with its severe industrial relations problems, prompted the rights issue and an agreed reduction in borrowing facilities to $400m this month.
Ten days ago Mr Scott also committed Lonmin to backing a number of social initiatives aimed at “rebuilding trust with our employees”.
“2012 is a year that will always be dominated by events at Marikana over the summer,” Mr Scott said. “In all, 46 people, many of them our colleagues, lost their lives.”
He added that Lonmin was continuing to co-operate with the Farlam inquiry into the Marikana clashes. The judicial commission was set up by South African President Jacob Zuma in late August to examine the examine the conduct of the company, the police and the unions.
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