Johannesburg, South Africa — MININGREVIEW.COM — 19 November 2008 – Lonmin plc – the world’s third- largest platinum producer – is to close mines, halt expansion and cut jobs in South Africa in the wake of the plunge in platinum prices and the international credit crisis.
“We are exercising producer discipline by announcing that we will close those portions of our operations which are uneconomic,” CEO Ian Farmer said in a statement to the Johannesburg stock exchange.
The statement revealed that Lonmin would suspend opencast mining at Marikana by 31 December. The London-based company added that it might close the “uneconomic” Limpopo Baobab mine shaft, and put Akanani and other expansion projects on hold.
Bloomberg News reports that platinum has fallen 64% from the record US$2 301.50 an ounce traded in March, as the global economy moves into a recession, eroding demand for jewelry and cars. The metal is now trading at around US$827.50 an ounce in London, and rival mining company Aquarius Platinum announced last month that it would cut production.
“We anticipate a sharp decline in investment in the industry in the short term, which could include shaft closures and mothballing,” Lonmin said, but added that falling supply might lead to a rebound in prices.
The company’s net income rose 45% to US$455 million R$.6 billion) in the year to 30 September from US$314 million (R3.2 billion) a year earlier.
Average platinum prices were 48% higher in the first nine months of Lonmin’s financial year than a year earlier. They were boosted by supply constraints because of a power shortage in South Africa, which accounts for more than two-thirds of world supply.