Lonmin cuts platinum sales goalComment on this story
Johannesburg - Lonmin lowered its sales forecast as the world’s three largest platinum producers said talks to end a six-week strike over pay in South Africa were suspended indefinitely.
Lonmin, the third-largest producer, won’t meet its full-year target of at least 750,000 ounces of the precious metal, it said in a filing today.
The Johannesburg-based company said it can’t estimate the increase in costs caused by the walkout.
More than 70,000 members of the Association of Mineworkers and Construction Union have been on strike since January 23 in the country that accounts for more than two-thirds of global output of the metal.
Anglo American Platinum said employers and the union remain far apart in the deadlocked discussions run by a state mediator.
Lonmin fell as much as 3.7 percent to 289.9 pence in London trading, the lowest in more than two months.
Amplats, as the biggest producer is known, gained 1.1 percent to 450 rand in Johannesburg by 2:33 p.m. Impala Platinum Holdings Ltd., the second-largest, advanced 0.6 percent to 115.37 rand.
The producers have offered annual increases of as much as 9 percent, lifting the existing basic wage of at least 5,000 rand ($466) a month to 6,300 rand to 7,200 rand by 2015.
South Africa’s rate of inflation was 5.8 percent in January.
The Amcu initially demanded immediate increases in basic wages to as much as 12,500 rand.
Yesterday, it said it would give the companies three years to meet the target.
The producers have lost a combined 6.9 billion rand in revenue to date, while employees have forfeited 3.1 billion rand in wages, the producers said on a website set up to give updates on the strike.
The walkout is driving up the average expense of production, Lonmin said.
“The unit-cost guidance will as a result also be negatively impacted,” the company said.
“Until the strike has ended, Lonmin is unable to provide specific details on these changes.”
The Amcu’s revised demand “remains unaffordable,” the three companies said in a statement, before today’s announcement of the collapse of negotiations at the Commission for Conciliation, Mediation and Arbitration.
Amplats is “discouraged by the turn of events,” chief executive Chris Griffith said in a statement today.
“We are hopeful though that Amcu will come to recognise and appreciate the realities of the company’s position and will work toward a solution that will benefit its members.”
Impala chief executive Terence Goodlace said the companies “remain committed to finding an affordable and sustainable solution” to the impasse over pay.
A Johannesburg court is due to rule by the end of the week whether the Amcu and its leaders are in contempt for allegedly ignoring an order handed down in January that the union prevent violence during a strike.
The application was brought by Amplats after an Amcu official was killed in clashes with police and two others were arrested for the attempted murder of a company employee last month. - Bloomberg News