Johannesburg, South Africa — 02 May 2013 – Lonmin Plc, the third-largest platinum producer, has shut down its Number Two furnace at Marikana, in north-western province of South Africa, following an unspecified incident. This means that two furnaces at the site are now offline.
“The incident has happened at a time when we had just shut down the Number One furnace for its planned upgrade of the hearth and shell,” Lonmin said in a statement reported by Bloomberg News.
Repairs to the Number Two furnace will take 30 to 40 days, Lonmin added. Three Pyromet furnaces, accounting for 50% of the company’s capacity, continue to operate, it said.
The stock fell as much as 4.5% and was 4.4% lower at 272.80 pence as of 11:15 a.m. in London.
It’s too soon to assess what the overall impact will be, Ben Davis, an analyst at Liberum Capital Limited said in an e-mail response to questions. “If the furnace is down for an extended period, it could lead to issues, given the inefficiencies of the smaller Pyromet smelters.
Last Friday Lonmin reported a fatality at the Merensky section of its K3 shaft at Marikana and halted production for an investigation. A six-week walkout last year at the Marikana operation, about 170km north-west of Johannesburg, resulted in the loss of an estimated 110,000oz of platinum production.
“The timing of this incident is unfortunate, given that the Number Two furnace essentially acts as a form of backup to the Number One furnace which has itself just been shut down as part of a planned 90-day maintenance programme,” said Justin Froneman, a Johannesburg-based analyst with Standard Bank Group Limited’s securities unit, which maintains a ‘buy’
recommendation on the stock.
Source: Bloomberg News. For more information, click here.