Lonmin Plc, the third-biggest platinum producer, is seeking to cut its workforce costs in South Africa by as much as 10 percent, or about 3,500 jobs, as prices slump.
Producers in the country, which has more than 70 percent of the world’s reserves, are battling prices that have tumbled 36 percent since 2011 while costs such as power rose as much as 26 percent annually in the same period. The largest companies including Anglo American Platinum Ltd. and Lonmin have seen their wage bills climb and output interrupted as workers went on strike over pay for as long as five months at a time.
“We need to make difficult decisions to maintain the resilience of our business and protect employment,” Chief Executive Officer Ben Magara said in a statement Thursday. Johannesburg-based Lonmin said it hopes job losses will be voluntary.
Lonmin reduced capital spending for the 2015 fiscal year by 26 percent to preserve cash as it committed to 2 billion rand ($166 million) of cost savings. Platinum prices stayed low, even as output fell short of demand due to excess stockpiles.
“We all have to protect the future of the business for as many employees as possible,” Magara said. “Better times are ahead, but we need to get from here to there.”
The National Union of Mineworkers, which was unseated by the Association of Mineworkers and Construction Union as the largest representative of employees at Lonmin, is “extremely shocked” about the company’s announcement, it said in an e-mailed statement Friday.
“We are going to fight against any job losses,” the union said. “The platinum sector had cut 35,000 jobs since 2012 and it is time to join forces to end this bloodbath.”