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Cape Town – Battling from an ever decreasing share price, Lonmin [JSE:LON] has managed to stem the cost of mining the platinum group of metals, it said on Thursday.
Lonmin’s share price plummeted from close to R100 in August 2012 to its current R7 on the JSE, caused by plummeting platinum demand, lengthy strikes and the Marikana massacre on August 16 2012, which was sparked by a wildcat strike at Lonmin’s Marikana mine near Rustenburg.
Its recent plan to reduce its workforce by 6 000 has already begun and Lonmin said 1 400 employees had left the business.
Lonmin’s cash costs were R10 499 per ounce, down from its original forecast of R10 800, which it planned to sustain for the year. This showed Lonmin’s “focused management attention”, it said.
Mining contracted by 6.8% in the second quarter of 2015, which contributed to the 1.3% contraction announced by Statistics SA this week. It’s overall contribution to the GDP contracted by 0.5% to 8%.
''We’ve already lost thousands of jobs on mining and it looks like we’re going to lose more with commodity prices coming down this quickly, added to the complication of high wage settlements and higher electricity and water rates,” economist Mike Schüssler told Bloomberg in July, after mining companies announced plans to cut up to 10 000 jobs in SA.
"On Monday, there will be a meeting to sign off on the mining industry's commitment to save jobs and ameliorate the impact of job losses," the mining minister’s spokesperson Mahlodi Muofhe told Reuters on August 25, without saying if any specific job-saving measures were on the cards.
Programme to sustain depressed environment
Lonmin announced on July 24 that it would start a programme of shaft closures and workforce reduction, which will reduce Lonmin’s cost base and underpin its ability to sustain a depressed platinum pricing environment over an extended period of time.
“Over the next two years 100 000 ounces of high-cost production will have been eliminated, but in the meantime the available resources of Hossy will be mined for value,” it explained.
“By the end of 2017, production will have reduced by 100 000 ounces per annum. Management has the target of cutting fixed and overhead costs at the same time.”
Lonmin’s objective is to maximise cash in the short-term and preserve long-term value for shareholders and all stakeholders and ensure the business is put in the right position to take full advantage of any improvement in PGM prices from the currently depressed levels.
On June 25, President Jacob Zuma announced the findings of the Marikana Commission, which found that Lonmin failed to ensure the safety of its workers and did not do its best to resolve the dispute with striking workers.
The lawyers of mine workers wounded and arrested during the Marikana massacre are claiming R4.5m from Lonmin and Protea Coin Security, the company Lonmin hired to beef up security.
Village chief Xolile Ndevu says his community will disintegrate if mining giants Lonmin and Anglo American go ahead with their planned 12 000 job cuts, City Press reported in August.
