Lonmin Reduces Sales Forecast Due to Ongoing Strike Action
Lonmin (ISE: LMI.L) shares have fallen some 20% since violent protests began at its Marikana mine in South Africa. The tragic turn of events has seen 45 miners lose their lives.
Lonmin said today it expected to produce between 685,000 and 700,000 ounces of platinum for the full year, down from its previous forecast of 750,000 ounces. It added that while all shafts were operational, mining activity was minimal. Consequently, it was putting the K4 shaft at the mine on care and maintenance from mid-October, terminating its contract with the company that supplies 1,200 workers for this part of the operation.
Lonmin made a wage offer last week, which was rejected by unions, but the company said it expected talks to resume today. Lonmin was reportedly offering 5,500 rand per month, whereas the unions are demanding 12,500 rand (about £930).
Simon Scott, acting CEO of Lonmin, said:
Our view is that negotiations are the best way to achieve a sustainable return to work. Clearly however, there will be consequences to jobs if there is a continuing delay in returning to production. The situation is delicate but we have limited options in terms of managing the trade-off between lost production, higher wages and business rationalization, including a significant reduction in jobs. There are already jobs that are at risk because of the current economic climate. The unprotected strike has already added pressure to some of our higher cost shafts. A prolonged delay in production will only force further difficult management decisions.
The troubles have also spread to other platinum mines in the region. Anglo American (ISE: AAL.L) suspended its operations on September 12, but has just announced that they will resume tomorrow, on September 18. Anglo American shares slipped 1%, while Lonmin shares were broadly unchanged.
Aquarius Platinum (ISE: AQP.L) , a much smaller outfit, also suspended its operations at Kroondal on Friday afternoon last week, but it expects work to resume today. Its shares added to gains made on Friday, climbing a further 9% to 53 pence.
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