London, England — 27 July 2012 – Platinum miner Lonmin has slashed spending plans up to 2014, holding back a push to ramp up key shafts in order to preserve cash as it warned that poor demand and weak prices battering the sector could persist for longer than expected.
Reuters reports that platinum miners “’ focused in South Africa, home to some 80% of the world’s reserves “’ have since 2008 been facing growing margin pressure from soaring costs, increasingly militant unions and, since last year, government-imposed safety stoppages. A lacklustre European economy has also weighed on demand for the precious metal, used mainly in auto catalysts and jewellery.
Lonmin, the third-largest platinum miner, said it had trimmed 2012 spending by US$20 million to US$430 million, but had cut its plans for its 2013 and 2014 financial years to just US$250 million “’ little more than that necessary to sustain operations “’ as it deferred investment in its Hossy, K4 and Saffy shafts.
It had hoped to ramp up those key growth shafts swiftly, to bring down the overall cost of producing an ounce of metal.
Lonmin’s capital expenditure blueprint had included roughly US$450 million a year until 2015 to boost production to 950,000ozpa, from 750,000ozpa targeted for 2012.
With platinum prices wallowing around 2012 lows, at levels last seen in late 2009, Lonmin is the latest miner to cut back on investment. Anglo American Platinum, the world’s largest platinum producer, again cut spending plans earlier this week as it undertook a major review, while smaller players like Aquarius have also scaled back activities.
Lonmin said it had embarked on a thorough review of its growth strategy, future production profile and consequent capital investment programme.
Source: Reuters Africa. For more information, click here.