Lonmin May Cut Spending, Produce Less Platinum on StrikesAndre Janse van Vuuren and Firat Kayakiran
Lonmin Plc, a producer of platinum with operations in South Africa, may cut capital spending and produce less metal than expected this year as a labor strike at the world’s biggest producers enters a second week.
Lonmin sold 134,804 platinum ounces in the three months ended December, the third-largest platinum producer said today in a statement. It had forecast sales above 750,000 ounces for the year through September and budgeted about $210 million for capital spending. Costs were seen below South Africa’s rate of inflation, running at 5.4 percent in December.
“Due to the ongoing strike we will reassess our guidance and update the market in due course,” the company said.
The Association of Mineworkers and Construction Union, or AMCU, called a strike on Jan. 23 at Lonmin, Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd. as it demands a doubling of basic monthly wages to more than 12,500 rand ($1,101).
The union’s demand is “unaffordable,” Lonmin Chief Executive Officer Ben Magara said at the company’s annual general meeting in London today. The three platinum producers are meeting with union leaders to find a way to settle a dispute that doesn’t harm competition. Lonmin wants to improve the conditions of the employees, Magara said.
“We need fundamental changes to the relations with the employees,” he said. “We need to build bridges of trust, success and developments.”
Tomorrow, the union will give its views on the offers the three companies made during the talks, Magara said.
AMCU rejects the companies’ wage increase offer, the union’s President Joseph Mathunjwa said over the phone today.