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Lonmin wields the axe as platinum price dips

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Platinum producer Lonmin [JSE:LON] wants 3 500 of its employees to accept voluntary severance packages to cut costs after the end of last year’s platinum strike coincided with a precipitous drop in platinum prices.

The dollar price of platinum has fallen from about $1 500 an ounce when the strike ended to $1 145 this week.

In rand terms, this drop has been softened due to the exchange rate, but even in rands, platinum has lost 8% of its value. The company will announce financial results tomorrow, which will show how severe a state it is really in.

The company received a “mandate” from the Association of Mineworkers and Construction Union (Amcu) on Thursday agreeing to the severance offer being made to workers, said Lonmin spokesperson Sue Vey.

The target is to cut about 10% of the company’s workforce “from top to bottom”.

The platinum sector as a whole employs just more than 195 000 people, according to government statistics, down from a high point of 205 000 in 2012, but high compared with the period right after the economic crisis in 2009, when jobs in the sector dropped to less than 180 000.

When Lonmin signed its wage deal with Amcu to end the five-month strike last year, it included forward-looking clauses anticipating future job cuts.

It got Amcu to agree to “deal in a constructive manner with recommendations regarding shafts or sections of shafts that are unprofitable, inefficient or unsustainable”.

A “constructive manner” included “considering” shaft closure or outsourcing.

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