Lonmin aims to cut 3,500 S.African jobs due to weak platinum price

by Reuters 0

Lonmin begins its post-strike rebuilding process Indaba is a platform where leaders from the mining and resources sectors engage in discussions. PHOTOS: Getty

Platinum producer Lonmin is in talks with unions and employees to cut 3,500 jobs at its mines in South Africa, it said on Thursday, highlighting the distress low prices are causing South Africa’s platinum industry.

The world’s third-largest producer of the precious metal said it hoped it could achieve the reduction through a voluntary process, with forced job cuts a last resort.

Like its peers, Lonmin was hit by a bruising five-month strike last year that cut production and dragged it into the red in the last financial year but failed to lift prices for the white metal.

“The mining industry is going through another challenging economic cycle and we need to make difficult decisions to maintain the resilience of our business and protect employment,” Chief Executive Ben Magara said in a statement.

“Nobody wants this, but we all have to protect the future of the business for as many employees as possible.”

London-listed Lonmin employs about 37,000 people, including contractors.

Its shares have lost about half of their value in the last year alone, battered by stubbornly low prices, down about 20 percent since the beginning of 2014.

“It sounds like a desperate attempt to cut costs in a rising inflationary environment of South Africa,” said SP Angel analyst John Meyer.

“It is difficult to forecast how the union will react to that. The move certainly risks another round of strikes.”

Lonmin shares in London were down about 5 per cent by 1518 GMT, underperforming a 2.5 per cent fall of the UK-listed mining sector.