The Sibanye juggernaut keeps on rolling. Formed in 2013 as a spin-off that retained Gold Fields’ deep-level and labour-intensive bullion assets in South Africa, the company has expanded aggressively into platinum. It has picked up, among others, the Rustenburg assets of Anglo American Platinum (Amplats) and the high-grade and palladium-rich Stillwater operation in the US state of Montana. Now, in an all-share deal, it has swallowed troubled platinum producer Lonmin. When the dust settles, Sibanye will be the world’s top primary producer of PGMs.

Lonmin, by contrast, was a decaying husk of its former self, a company that was burning cash and standing on the edge of the abyss. Its ebbs and flows mirrored the turbulent history of South Africa’s mining industry.

Lonmin was formerly the platinum mining unit of Lonrho, the London and Rhodesian Mining and Land Company Limited, incorporated in 1909. For decades in the late 20th century, it was run by “Tiny” Rowland, a corporate raider and maverick whom the former British prime minister, Edward Heath, said represented “an unpleasant and unacceptable face of capitalism”. The unprofitable ranching and mining company in the former Rhodesia was transformed under Rowland into a sprawling business empire across Africa. He befriended many of the first wave of African leaders who led their emergent nations from colonialism. On his death in 1998, Nelson Mandela hailed his “enormous contribution, not only to South Africa but the whole of Africa”.

The mining arm that became the spin-off Lonmin would slowly sink in the 21st century. The company attempted a costly pivot to mechanisation that had to be abandoned in the face of unforgiving geology. And having been built under apartheid in large part by the exploitation of black migrant labour, it became one of the key frontlines in the spectacular rise of the militant Association of Mineworkers and Construction Union (Amcu) in 2012. A violent wildcat strike at its Marikana mine in August 2012 triggered the Marikana Massacre, when South African police shot dead 34 striking mineworkers, many in the back.

The writing was on the wall for Lonmin. The company was found to be woefully negligent regarding its social and labour commitments to its workforce and surrounding communities, fanning the flames of social unrest. Three times since 2009 it went to shareholders for rights issues, the last at a massive discount. In 2014, it was crippled by a five-month Amcu strike – a strike that did surprisingly little for the depressed platinum price. With its primary listing in London, its share had been reduced to a penny stock, and without a massive injection of cash into its loss-making shafts, it was, as Sibanye CEO Neal Froneman told Business Maverick last week, “not a going concern on a stand-alone basis”.

Small wonder that its shareholders grabbed the lifeline that Sibanye threw them in the form of an all-share deal that means its investors now have shares worth more than the paper on which they are printed. The merger will formally close on 7 June.

There are still plenty of challenges and plenty of hard decisions ahead. When the deal was announced late in 2017, 12,600 job cuts were envisioned by Lonmin. One of the regulatory conditions of the merger is a six-month moratorium on enforced retrenchments, so nothing immediate on that scale will happen. And improved economic circumstances mean the cuts may not be so massive. Sibanye, meanwhile, will review all of the shafts that are coming into its fold. Some, it must be said, are near the end of their reserves so they will likely close sooner rather than later.

Sibanye’s main interest in extracting value from Lonmin is through the potential synergies, which mean duplicated tasks and management structures will be dissolved.

Amcu, which tried to block the merger in court, could protest against any looming lay-offs through wildcat strikes or other means, and platinum wage talks are also on the horizon. And the National Union of Mineworkers (NUM) is looking to regain ground it lost to Amcu. So brace for another round of potential turbulence on the platinum belt.

One job that is on the block is that of Ben Magara, who as CEO has been the affable public face of Lonmin over most of the course of these past seven tumultuous years. One suspects he will find a good job elsewhere in the mining industry. As for Froneman, he is ready to steer this precious metals giant into a potential future involving the battery metals that power electric cars. And he is clearly in the driver’s seat with his hands firmly on the steering wheel. DM