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Lonmin ramping up production

Headgear at Lonmin’s
Marikana Saffy shaft
London, England — MININGREVIEW.COM — 18 November 2009 – Lonmin “’, the world’s third-largest platinum producer “’ intends ramping annual production up to a sustainable 850 000 ounces of platinum from 2013, after a year in which safety stoppages and mine closures weighed heavily on output.

Revealing this in a statement issued here, CEO Ian Farmer said the outlook for platinum was improving.  “Lonmin is studying whether it should build another smelter to absorb future production, and to provide a backstop to its troublesome No 1 furnace, which has had a number of outages since its commissioning in 2002.

“It is crucial that the growth in mined production is supported by processing capacity and reliability, particularly at our smelting facility,” Farmer emphasised.
The No 1 furnace has been rebuilt after a matte run-out in June. It resumed operations in November, with the first matte tapped a week ago. “As a result of the rebuild, refined production during the first quarter of the 2010 financial year will be well below that of the same period last financial year,” the company said.  

Lonmin’s total refined output in FY2009 was 657 317 oz of platinum and 1.24 Moz of platinum group metals “’ 6% and 7% lower year-on-year respectively.

The company’s platinum sales in financial 2009 were fractionally below guidance at 682 985 oz. It forecast 2010 sales at 700 000 oz, requiring capital expenditure of US$270 million (almost R2 billion).

During 2009, Lonmin shut down production at unprofitable shafts, shedding about 7 100 jobs, of which contractors comprised 2 300. The company also lost 30 000 oz of production during the year because of the government’s tougher stance on fatal accidents, which prompted it to temporarily shut affected areas pending investigations.

Lonmin’s capex will be between US$300 million (R2.2 billion) and US$350 million (R2.6 billion) from 2011 to reach a production level 850 000 oz of platinum by 2013.

“We expect demand to improve gradually in 2010,” Farmer said. “In early to mid-2011, we expect to see the start of a more significant upturn in demand, supported by increasing momentum in the automotive and industrial sectors followed by a more pronounced market rebound, with the market moving back into deficit,” he added.