Lon­min dips 17% on news of 6 000 job cuts

CityPress - - Business and Tenders - – Bloomberg

Lon­min plunged to a record low on Fri­day on mount­ing con­cerns that the plat­inum miner will need to raise funds and af­ter it an­nounced plans to cut up to 6 000 jobs.

Lon­min is the world’s third-largest plat­inum pro­ducer and its shafts near Marikana were at the cen­tre of the wild­cat strike that led to po­lice shoot­ing dead 34 protest­ing mine work­ers in Au­gust 2012.

The pro­jected job cuts will af­fect about 16% of Lon­min’s staff and con­trac­tors as the com­pany closes its Hossy and New­man shafts, and moth­balls three oth­ers while re­duc­ing its an­nual plat­inum out­put by 100 000 ounces, said the com­pany.

The planned job cuts in­clude staff who took vol­un­tary re­dun­dancy pack­ages of­fered in May. Chief ex­ec­u­tive of­fi­cer Ben Ma­gara also said the com­pany would an­nounce be­fore Novem­ber whether it would re­view its cap­i­tal struc­ture and how it would re­fi­nance its debt fa­cil­i­ties. Lon­min shares dropped by as much as 17%. Com­pa­nies, in­clud­ing An­glo Amer­i­can Plat­inum and Im­pala Plat­inum, the two big­gest op­er­a­tors, are re­duc­ing costs as profit mar­gins shrink with tum­bling me­tal prices.

Plat­inum has been in a bear mar­ket for two years and South African pro­duc­ers are los­ing money on about three of ev­ery four ounces they mine. “Los­ing jobs is not pleas­ant, but ev­ery­one is hav­ing to take sig­nif­i­cant short-term pain,” said Ma­gara.

“Our cost-min­imi­sa­tion plans are de­signed to im­prove this po­si­tion as much as pos­si­ble,” said Lon­min.

“The con­se­quence of these de­ci­sions will be that the re­main­ing shafts will al­low for a smaller, more sus­tain­able and ag­ile busi­ness.”

Lon­min had net debt of $282 mil­lion (R3.5 bil­lion) and com­mit­ted debt fa­cil­i­ties of $563 mil­lion at March 31, it said in May.

The shaft clo­sures are a step in the right di­rec­tion, said Nu­mis Cor­po­ra­tion an­a­lysts, in­clud­ing Cai­ley Barker, in an emailed note.

“As the mar­ginal player in the space, in our view Lon­min will have its work cut out to sur­vive through this low price cy­cle,” they wrote.

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