Lonmin Could Miss Its Platinum Output Target Due to Karee Strike, RBC Says

Lonmin Plc (LON), the world’s third-largest platinum producer, may fall short of its annual output target by about 2 percent if a strike at its Karee mine in South Africa continues, RBC Capital Markets analyst Leon Esterhuizen said.

Missing the goal of producing 750,000 ounces of platinum in the year to Sept. 30 is “probably a given,” he said today. The target will probably be cut to about 730,000 or 735,000 ounces if Karee doesn’t resume output in the next two weeks, he said.

Platinum companies have been boosting production to take advantage of rising prices for the metal, used in jewelry and in devices to control vehicle emissions. Platinum for immediate delivery in London has risen 16 percent in the past year to $1,779.25 an ounce as of 5:05 p.m. local time. Ravin Maharaj, a Lonmin spokesman, declined to comment on the strike’s effect.

Karee, part of Lonmin’s Marikana operation, produces about 1,500 ounces of the metal a day, according to RBC’s Esterhuizen. Production at the mine has been suspended since the night shift of May 17 when 9,000 workers began their strike.

National Union of Mineworkers members are acting because of an internal dispute between the union’s office in Rustenburg and leadership of its Karee branch, rather than any grievance with the company, NUM spokesman Lesiba Seshoka said on May 20.

“The whole industry needs to worry,” said Esterhuizen by phone from London. “There’s a growing sense of militancy and aggressiveness in the labor unions.”

Lonmin, which yesterday began firing the striking workers, has also re-hired some, Seshoka said by mobile phone. Lonmin and the union are meeting in Rustenburg today for talks, he said.

Lonmin gained 0.1 percent to 1,496 pence by the 4:30 p.m. close of London trading, giving the company a value of 3 billion pounds ($4.9 billion). Anglo American Platinum Ltd. and Impala Platinum Ltd. are the largest producers of the metal.

To contact the reporter on this story: Lauren van der Westhuizen at at lvanderwesth@bloomberg.net.

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net

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