JOHANNESBURG – Lonmin, the world’s third-largest platinum producer, said on Friday that it had greater leeway to delay the 12600 job losses because of improved metal prices in the three months to December.
The company’s chief executive, Ben Magara, said some shafts that had been earmarked to go on care and maintenance had been kept open for longer.
“The loss of approximately 12600 jobs announced in 2017 is likely to occur over a longer period than the original three years to 2020,” said Magara.
Lonmin planned to freeze output at the Hossy shaft as part of a measure to cut high production costs in a weak platinum price environment.
“Hossy, which was due to go on care and maintenance at the end of 2018, is now expected to be put on care and maintenance by the end of the financial year,” Magara said.
An oversupplied platinum market in a sustained decline environment has severely hurt Lonmin, which is the subject of a takeover by JSE-listed Sibanye-Stillwater.
The company said on Friday the platinum group metal (PGM) basket price had improved, driven by palladium and rhodium.
Seleho Tsatsi, an investment analyst at Anchor Capital, pointed to the increase in the PGM basket price as most noteworthy in Lonmin’s report.
“As their 2018 financial year results showed, the improvement in the basket price has had a hugely positive effect on the company, allowing it to delay job cuts. The big question now is whether the deal to merge Lonmin and Sibanye-Stillwater will go through,” said Tsatsi.
In May last year, Magara received a backlash after saying 12600 jobs at Lonmin were at risk over the next three years as the company faced a liquidity cliff.
Magara said at the time that Lonmin was hamstrung by its capital structure and liquidity constraints, which limited its ability to exploit its high-quality ore reserves and assets.
However, the company suffered severe production losses due to two fatalities.
It reported a loss of 116000tons in the three months to December due to safety, compared to 57000 tons in the previous period.
Unit costs increased 16.5percent toR14795 on the back of the lower production.
Lonmin said the proposed takeover by Sibanye-Stillwater was on track. The majority union at Lonmin appealed the Competition Commission's decision to approve the merger. A Competition Appeal Court hearing on the appeal is scheduled for April 2.
The merger is subject to the approvals of Lonmin and Sibanye-Stillwater shareholders as well as the courts of England and Wales.
Lonmin shares closed 8percent higher at R11.74 on the JSE on Friday.