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Fanagalo, the Esperanto of the mines. A hodgepodge of ethnic tongues, such as Zulu, Xhosa, Tswana, Shangaan and oth- ers, it also includes some Afrikaans and a smattering of English. From time to time, the unions try and get Fanagalo banned. The language is a throwback to the apartheid era, and incor- porates little of the niceties of the tongues from which it borrows. There's no please or thank you; rather, it's a "do-this, do-that, yes sir" kind of thing. It persists, because Fanagalo is quick to learn and communication is vital when working under more than a million tons of rock. Above ground, a different kind of com- munication is also taking place. As part of its turnaround strategy, the company will shed 6,000 jobs or about 17% of its work- force. Recalling that Lonmin has experi- enced severe periods of labor unrest, and job cuts are a red line with unions, the decision had to be handled with care. "It has been a challenging three years," said Executive Vice President–Human Resources at Lonmin Abey Kgotle. "Coming from the tragedy of 2012, and building a relationship with a new union, then going into a five-month strike, has made for a difficult time." For much of the past two decades, Lonmin, along with its peers, has been dealing with the National Union of Mineworkers (NUM). For years, the NUM was the voice of workers across the sector, but this began to change a few years ago as a rival emerged. The Association of Mineworkers and Construction Union (AMCU) began life as a breakaway faction of the NUM but has since become a stand- alone force with which to be reckoned. From a management perspective, a new union has meant dealing with an entirely different labor structure. Broaching job cuts had to be handled with the utmost care. "The fact that we reached agreement on a restructuring process suggests that the relationship with AMCU is maturing," Kgotle said. "It has been a tough process and hard decisions needed to be made. But we are finding each other." The sting of job cuts has been softened by using natural attrition and voluntary sever- ance packages. Others are being retrained and moved to vacant posts. "We've already reached 60% of our headcount reduction tar- get; quite remarkable in five months." The softly-softly approach appears to be working. "Our engagements with AMCU are robust and they are not afraid to chal- lenge us," Kgotle added. For the men in suits, hard work also lies ahead. In November, Lonmin reported an operating loss of $207 million. To repair the balance sheet it will cut platinum out- put from more than 750,000 oz currently to 700,000 oz in 2016, and then down to 650,000 oz for 2017 and 2018. The company said it would write down the value of its assets by more than half by taking an impairment of as much as $2.05 billion. Lonmin also turned to shareholders to raise almost $400 million through a rights issue, drastically diluting its holdings. According to Bloomberg , shareholders agreed to buy 19.2 billion new shares, and HSBC Holdings, JPMorgan Cazenove and Standard Bank Group's South African unit will procure subscribers for the remaining 7.8 billion by mid-December. The banks would also pick up unsubscribed shares. The value of the stock, which climbed to $13 billion at its peak in 2007, is now just $210 million, a spectacular destruc- tion of wealth for its shareholders. "We've taken extensive time to put together a plan, which was then again extensively reviewed by external parties. The general agreement is that it is a robust plan to suit a low-priced platinum environment." Still being considered are shaft clo- sures. The W1, E1 and 1B shafts are com- ing to the end of their lives, and will likely be closed. It's quite possible, though, that operations will continue—contractors working the shafts have approached Lonmin with plans to prolong mine life. At Hossy shaft, development work has already stopped and, over the next 18 months, remaining work will be completed when it will be put on care and mainte- nance. Newman shaft is closing but could also be revived in a better price environ- ment, particularly as it can be used to access a nearby undeveloped orebody. At the same time, it is unlikely that Lonmin would become a takeover target, given the overall market conditions for platinum. Both Anglo Platinum and Impala Platinum have begun shedding assets. However, this is not a route Lonmin is considering. For now, the company's strategy will be to rebuild and prepare for better times ahead. Da Costa noted that the next three to four years would see a guarded price out- look as years of over-investment by the industry weigh on a recovery. However, the situation should begin to improve after that as demand begins to outstrip supply. Platinum remains an industrial metal used in vehicle catalytic converters and emerging fuel cell applications. It also enjoys growing share of precious metal sales, particularly in the Far East. "Any investor in the company now has a positive outlook for platinum—they believe in the future of the metal. The fundamen- tals look good. So our immediate focus is to get the fundamentals of the business right over the coming period. When price im- proves—and it will—we'll be ready." 18 E&MJ; • JANUARY 2016 www.e-mj.com LO N M I N An engineer inspects a locomotive at Saffy. The mine works the UG2 Reef, the deeper of the region's two major platinum veins. It is returning to labor-intensive mining after a failed mechanization exerpiment.