Lonmin seeks cost cutsComment on this story
Johannesburg - Lonmin said it’s looking at ways to cut expenses as a five-month strike in South Africa crippled third-quarter platinum output, reduced sales by 68 percent and will raise costs by more than 60 percent for the year.
Lonmin is “assessing our medium- to long-term options around improving the productivity and profitability of our business, including cost reduction,” chief executive Ben Magara said in a statement today.
The walkout by more than 70,000 miners at Lonmin, Anglo American Platinum and Impala Platinum cost the companies about 24 billion rand in lost output and workers 10.7 billion rand in wages by the time it ended on June 24.
The strike pushed the economy into contraction in the first three months of this year as mining output plunged.
South Africa accounts for more than two-thirds of mined production of the metal.
Lonmin reported no output in its third quarter ended June 30.
The strike affected 192,700 platinum saleable ounces in the period, and resulted in the loss of 348,400 ounces in the nine months through June.
All 11 shafts are back in production and the company is operating at about 30 percent of normal monthly output.
Lonmin will reach 80 percent of normal production by the end of September and a full steady state in the first quarter of fiscal 2015, it said.
The company reduced its capital-spending forecast to $100 million for the fiscal year ending September 30 from $210 million and sees the unit cost per ounce of platinum group metals produced to be more than 60 percent than a year earlier.
This includes costs of $322 million incurred mainly because of idle production and security costs, it said.
Lonmin forecasts production of 340,000 ounces of metals in concentrate for the fiscal year, and sales of 420,000 ounces. - Bloomberg News