Lonmin sales hurt by miners’ strikes

Platinum miner Lonmin cut its full-year sales forecast as it continues to be hurt by violent strikes at its mines in South Africa.

The world’s number three platinum producer said it now expects to sell between 685,000 ounces and 700,000 ounces of platinum for the year ending September 30.

The company, whose shares have dropped 37 per cent since January, said in August that it was unlikely to meet its previous target of 750,000 ounces.

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Lonmin also reiterated its expectation to exceed its forecast of an 8.5 per cent rise for unit costs.

The company has been hit by a month of lost production and the absence of chief executive Ian Farmer, who has been on sick leave since last month.

It has already warned it is in danger of breaching debt covenants and has said it may need to raise equity. The covenants would likely be breached by September 30, when they are due to be tested.

The strikes, arising out of a push for wage hikes, have already claimed the lives of 45 people, the company said.

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Last week, striking workers rejected a pay offer from Lonmin, dimming prospects of ending several weeks of industrial action.

Yesterday, the company said it gave notice to terminate its contract with Murray and Roberts – a contractor which supplies about 1,200 staff at its K4 shaft with effect from October 17.

“The situation is delicate but we have limited options in terms of managing the trade-off between lost production, higher wages and business rationalisation, including a significant reduction in jobs,” Simon Scott, Lonmin’s acting CEO, said.

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