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Lonmin to axe a further 2,500 jobs as platinum price slumps

Published: 10:26 24 Jul 2015 BST

Zanaga-worker
Lonmin will cut 6,000 jobs in total including contractors

Platinum miner Lonmin (LON:LMI) will axe a further 2,500 jobs as the metal’s price continues to slump.

Platinum is at a six-and-a-half-year low of US$976 and Lonmin admitted that, at this price, it is running at a loss.

Lonmin will close two shafts in South Africa, affecting around 6,000 jobs including contractors, a significant hike from the 3,500 it indicated it would cut in May.

The closures will reduce platinum production by 100,000 ounces, making the business “smaller, more sustainable and agile,” the company said.

Lonmin chief executive Ben Magara said: “Losing jobs is not pleasant but everyone has to take significant short term pain to preserve optionality for the long term. 

“All costs have to be reduced including labour and I hope our formal consultation process will come up with mitigations to minimise job losses.‎"

Last year, miners went on strike in South Africa for five months in an effort to increase pay.

The strike ended with the companies agreeing to give workers 1,000 rand extra a month.

Martin Potts at finnCap predicted earlier this week that lower commodity prices would affect deep mining South African companies most, as they have  high costs incurred by mining at depths of more than 1,000m.

“The only thing keeping them afloat is the depreciating rand against other currencies” he said.

Shares in Lonmin (LON:LMI) eased 9.2% to 68.5p.

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