Maintenance. We are currently updating the site. Please check back shortly
Members login
  • TrustLaw
  • Members Portal
Subscribe Donate

Higher stocks give Lonmin breathing space during strike -CEO

Source: Reuters - Tue, 4 Feb 2014 18:01 GMT
Author: Reuters
Tweet Recommend Google + LinkedIn Email Print
Leave us a comment

By Silvia Antonioli and Ed Stoddard

CAPE TOWN, Feb 4 (Reuters) - Higher stocks than usual are helping South African platinum producer Lonmin to cope with mining strikes that are paralising its production, its chief executive said on Tuesday.

The world's No. 3 platinum producer is losing about 3,100 ounces of refined output a day due to a strike over wages, which started almost two weeks ago and has also hit bigger rivals Anglo American Platinum and Impala Platinum.

"We have been very fortunate in the sense that the performance of 2013 gave us some breathing space," Chief Executive Ben Magara told Reuters on the sidelines of a mining conference in Cape Town.

"In terms of our inventories, in the first quarter we have produced more than we have sold because we really wanted to just make sure we had some arrangements to meet our customers' (demand) and make sure that relationship is sustained," he said.

In the three months to Dec. 31, the first quarter of its financial year, Lonmin's refined production increased by 45 percent year-on-year to 196,249 saleable platinum ounces.

Sales for the quarter, however, were up just 24 percent to 134,804 ounces.

"In general, at the end of the year you empty everything ... but last year we ended up with some reasonable stocks, so I think we are in a much better position than we were before," Magara said.

Wage talks between South Africa's Association of Mineworkers and Construction Union (AMCU) union and the world's top three platinum producers resumed on Tuesday to try to end the strike that has seen outbreaks of violence and is costing Africa's biggest economy an estimated $36 million a day.

The strike has halted production on about 40 percent of global platinum supply, according to estimates by Thomson Reuters GFMS.

Companies have said they cannot afford the demands to double miners' pay, and Magara said the latest offers of about 9 percent were more than reasonable, given an inflation rate of 5.4 percent.

"This industry is extremely under stress ... we are doing everything to maintain costs. The mines are getting deeper, they need refrigeration and the grades are getting lower so it's extremely challenging and we cannot afford to meet the demands that are on the table," he said.

"We have put an offer that is way beyond inflation and we believe that is really a reasonable offer and it's what we can afford as a business," he said.

He also said he hoped AMCU, known for its uncompromising stance in wage negotiations, would understand that the sustainability of the company was on the line.

"I hope AMCU colleagues will realise that we are compromising the sustainability of our business if we give in to certain demands," Magara said.

AMCU emerged as the top union on the platinum belt after poaching tens of thousands of members from the once unrivalled National Union of Mineworkers (NUM) in a bloody turf war in 2012 that killed dozens of people and rumbles on.

About 100,000 workers are either on strike or being prevented from reporting for duty in the platinum shafts northwest of Johannesburg.

This has dealt a blow to investor confidence in the country that produces over 70 percent of global supplies of the precious metal used for emissions-capping catalytic converters in cars.

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of the Thomson Reuters Foundation. For more information see our Acceptable Use Policy.

comments powered by Disqus
Most Popular
LATEST SLIDESHOW

Latest slideshow

See allSee all
FEATURED JOBS
Featured jobs