Lonmin, world’s third-biggest platinum producer, to cut 6,000 jobs

Johannesburg-based Lonmin, the world's third-biggest platinum producer, might cut as many as 6,000 jobs and close shafts as platinum prices have fallen to six-year low.

Lonmin intends to shut two shafts, Hossy and Newman, and idle three others, cutting annual output by 100,000 ounces, according to the Johannesburg-based company's statement yesterday.

The planned job cuts included contractors and staff who took voluntary redundancy packages offered in May, according to Lonmin.

Mining companies in South Africa, which account for over 70 per cent of global platinum output, were looking to cut costs as profit margins have shrunk with declining metal prices. Platinum was down 45 per cent since the start of 2011.

''The consequence of these decisions will be that the remaining shafts will allow for a smaller, more sustainable and agile business,'' Lonmin said. ''Our objective is to save the majority of the positions in the company. All costs, not just labour costs, have to be reduced and productivity improved if the business is to be sustainable.''

Lonmin, which employed over 28,000 people as of 30 September was making a loss before interest, tax, depreciation and amortisation, the company said.

''Our cost-minimisation plans are designed to improve this position as much as possible,'' it said.

Another London-listed mining group, Anglo American was also cutting 6,000 jobs and stepping up a cost-cutting programme, after slumping to a first-half loss due to the rout in metal prices.

Increasing concerns about oversupply, coupled with declining demand in China – the largest commodities consumer - had hammered metals prices over the past week.

Platinum was down to less than $1,000 an ounce – from nearly $2,000 in 2011 – while copper had hit the lows of 2009.

Gold was down to fresh five-and-a-half-year lows of $1,077.00 yesterday, extending sharp losses from the start of the week when investors liquidated positions on the precious metal on expectations that US interest rates would soon rise.

Gold had long been seen as a safe investment during times of uncertainty, but when interest rates rose investors typically switched out of non-yielding gold into other assets that paid interest or a dividend.