South African miner shutters one mine and fires 5,500 workers

25 February 2009

The world's third-biggest producer of platinum, Lonmin Plc, operating in the Bushveld complex of South Africa, announced yesterday that it will close one mine and axe 5,500 workers due to the global collapse in demand for platinum from the automobile industry.

London-based Lonmin has two multi-shaft mining operations, located at the Marikana Region and the other at Limpopo Region, where it will reduce up to 4,000 full time employees or contractors, 300 of which are expected to be management personnel at Marikana, and the Baobab shaft at Limpopo will be placed on care and maintenance, with around 1,500 full time employees expected to be retrenched.

The miner said that the final number of personnel affected, as well as the associated expected annual cost savings and one-off costs of this down-sizing, will be confirmed once the restructuring programmes at Marikana and Limpopo are completed and additional details will be disclosed at its interim results on 11 May 2009.

With the automobile industry being one of the main buyers of platinum used in catalytic converters, vehicle sales are in the doldrums globally, which in turn has devastated the demand for platinum, where the prices for platinum has nosedived by more than 50 per cent from its peak last year.

Currently, platinum prices is hovering around $1,080 per ounce, which is less than half of last year's high of $2,260 per ounce.

Even the world's top producer of platinum, Anglo Platinum said last month that it was reducing its employee strength by 10,000 while Impala Platinum the second biggest producer of the metal said last week that it would cut production by 200,000 ounces this year.