Platinum miner Lonmin is to cut 6,000 staff at its South African mines, underscoring the drastic impact of falling prices on an industry beset by labour unrest.
The London-listed extractor said in a statement that it will close its Hossy and Newman shafts at Marikana in a bid to end higher cost production. In a third quarter update, the company said platinum prices had fallen 14.4% since interim results in May to $964 per ounce on 22 July, necessitating extensive cuts to staffing and operations. The price has decreased by 17.9% on last year.
In addition to the job cuts, which will affect both permanent staff and contracters, Lonmin reported that it intends to reduce production by around 100,000 platinum ounces over the next two fiscal years. Three additional mines will be put under ‘care and maintenance’ measures.
“Losing jobs is not pleasant but everyone is having to take significant short term pain to preserve optionality for the long term,” said Lonmin chief executive Ben Magara.
“All costs have to be reduced including labour and I hope our formal consultation process will come up with mitigations to minimise job losses”.
Lonmin and fellow miners Anglo-American Platinum and Impala Platinum are still struggling to recover from a protracted strike which paralysed the industry for five months in 2014.
The Association of Mineworkers and Construction Union, a militant union which orchestrated the strikes, has exerted an increasingly powerful influence on the sector as it displaces the National Union of Mineworkers as the main representative of platinum miners.
The planned retrenchments cap off a torrid period for Lonmin, which was last month accused of failing to engage with workers before the police killing of 34 striking miners at its Marikana operations in 2012.
The Marikana Commission of Inquiry, released by the South African government in June and written by a independent former judge, found that the company had failed to respond adequately to the threat of violence and had not implemented promised social plans for its employees, including the construction of houses.
The company has undergone a number of senior management changes since the killings, including the appointment of Magara as chief executive, and says it fully supports the conclusions of the inquiry.