Lonmin suspends all opencast operations

Lonmin, the world’s third-largest platinum producer, on Tuesday said it planned to suspend all its opencast operations from the end of this year as it scales back on unprofitable ounces.

Lonmin’s opencast operations contributed about 60 000 ounces to the company’s total financial year 2008 sales of 726 918 ounces of platinum in the year to end September 2008.

The company, which is targeting 2009 financial year sales of the same magnitude, also said it was considering options related to the future of its “uneconomic” Limpopo Baobab mine.

Limpopo Baobab produced 25 000 ounces of platinum in the 2008 financial year, and while the company could not say when these ounces would be excluded from its production profile, it did warn that the 2009 financial year production target included these ounces.

This means that the company will have to make up at least 60 000 ounces, if not 85 000 ounces, of production from its underground operations and the projects currently being ramped up.

Lonmin CEO Ian Farmer said during a presentation of the company’s results that a challenging 2008 financial year meant it was time to rebuild Lonmin.

“We are prepared to be radical in our approach,” said Farmer, who added that it actually had no choice.

Other changes include the halving of exploration expenditure and capping capital spending at $250-million in 2009.

“We have reviewed our capital-expenditure programmes throughout the business. As a result, our capital-expenditure programme will be primarily focused on mine development at Marikana and obligatory spend at our Process Division,” Lonmin said in a statement accompanying its results.

All other growth projects have been placed on a care and maintenance basis.

While the company was reluctant to clarify the number of retrenchments it is considering in light of the dramatic changes, Farmer indicated that 1 000 contract workers would lose their jobs at the opencast operations.

He said there were about 2 000 people employed at Limpopo, where no decision had yet been taken on the operations future.

Farmer admitted that negotiations regarding potential retrenchments and relocation of employees to other operations still had some way to go. — I-Net Bridge

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Sherilee Bridge
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