Lonmin opens talks to cut another 3 500 jobs

By Silvia Antonioli

LONDON, May 7 (Reuters) – Platinum producer Lonmin is in talks with unions and employees to cut 3,500 jobs at its mines in South Africa, it said on Thursday, highlighting the distress low prices are causing South Africa’s platinum industry.

Lonmin workers on strike listen to President of South Africa's Association of Mine workers and Construction Union (AMCU) Joseph Mathunjwa (not in picture) as he delivers his speech at the Wonderkop stadium in Nkaneng township outside the Lonmin mine in Rustenburg May 14, 2014. The president urged its members on Wednesday to remain united and strong in the face of efforts by the three major platinum companies to force miners to end a 16-week stoppage. REUTERS/Siphiwe Sibeko
Lonmin workers on strike listen. REUTERS/Siphiwe Sibeko

The world’s third-largest producer of the precious metal said it hoped it could achieve the reduction through a voluntary process, with forced job cuts a last resort.

Like its peers, Lonmin was hit by a bruising five-month strike last year that cut production and dragged it into the red in the last financial year but failed to lift prices for the white metal.

“The mining industry is going through another challenging economic cycle and we need to make difficult decisions to maintain the resilience of our business and protect employment,” Chief Executive Ben Magara said in a statement.

“Nobody wants this, but we all have to protect the future of the business for as many employees as possible.”

London-listed Lonmin employs about 37,000 people, including contractors.

Its shares have lost about half of their value in the last year alone, battered by stubbornly low prices, down about 20 percent since the beginning of 2014.

“It sounds like a desperate attempt to cut costs in a rising inflationary environment of South Africa,” said SP Angel analyst John Meyer.

“It is difficult to forecast how the union will react to that. The move certainly risks another round of strikes.”

Lonmin shares in London were down about 5 percent by 1518 GMT, underperforming a 2.5 percent fall of the UK-listed mining sector.

 

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