PLATINUM miner Lonmin has forecast a fall in sales for the year to end- September and given notice to terminate its contract with Murray & Roberts, which supplies 1200 staff at Lonmin's K4 shaft at the Marikana mine near Rustenburg, with effect from October 17.
The mine cited the six-week illegal strike at Marikana for the drop in expected full-year sales to between 685000 and 700000 saleable ounces of platinum, from 721000oz last year. The termination of the M&R contract is part of a decision announced on July 26 to defer some capital expenditure at the K4, Hossy and Saffy shafts.
"This sales guidance reflects the company's inability to mine in recent weeks because of the illegal strike, and the serious and organised violence and intimidation aimed at blockading the company's processing plants at the mine."
Lonmin said mining activity at Marikana remained minimal, although all shafts were operational.
The world's third-largest platinum miner also said unit costs would come in higher than the guidance of 8.5% for the full year.
Lonmin said as part of its ongoing capital expenditure review, it would be moving its K4 shaft onto care and maintenance. A further announcement on the broader implications would be made in due course.
In announcing the spending review in July, Lonmin said it would cut planned annual spending of $450-million (R3.7-billion) back to $250-million (R2.05-billion) for the next two years.
That meant scaling back its production target as well, from the 950000oz it envisaged producing by 2015. It said it would produce 750000oz for the next few years.
The 950000oz target was part of a plan to bring down unit costs.
"If we can't achieve that unit cost reduction through growth we'll have to achieve it through cost savings and efficiencies, which is a lot more difficult," chief executive Ian Farmer said at the time.
"We've specifically made sure we've reduced some of our capital projects to idling speed rather than close them. That allows us to accelerate off a moving base rather than a static one, which allows us more flexibility and a quicker response."
Lonmin is not the only platinum miner to announce cost-cutting measures this year as the sector struggles with rising costs, falling prices and labour woes. – I-Net Bridge
