London - Lonmin [JSE:LON], battling turbulence in the
platinum sector, has slashed its spending plans and decided to hold back
efforts to ramp up key shafts, warning a period of poor demand and weak prices
could persist for longer than it had previously expected.
The miner has cut 2012 spending by $20m to $430m and has
slashed capital spend for its 2013 and 2014 financial years to just $250m,
deferring spending on its key Hossy, K4 and Saffy shafts. It had hoped to ramp
up those growth shafts swiftly, to bring down the overall cost of producing an
ounce of metal.
Lonmin's capital expenditure blueprint had included $450m a
year until 2015 to boost production to 950,000 ounces a year, from 750,000
targeted for 2012.
The miner, which saw third-quarter platinum sales dip just
over 6%, said it was keeping its 2012 sales target but said its 2013 target
would now be flat at 750,000 platinum ounces.
Lonmin, which analysts say has one of the weaker balance
sheets in the troubled industry, said it could also tap debt markets, adding it
had embarked on a "thorough review of our growth strategy, future
production profile and consequent capital investment programme".
"This review is ongoing and we are examining all cash
conservation and cost-saving measures available to us," it said.
Lonmin saw pretax profit tumble in the first half, as miners
across the South African platinum sector grapple with rising costs, weak
European demand that weighed on prices, government-imposed safety stoppages and
militant unions.
Anglo Platinum [JSE:AMS], the world's largest platinum producer, said earlier this week that earnings fell almost 80% in the six months to the end of June. The miner replaced its chief executive last week.