Lonmin is to slash costs as the platinum price remains under pressure

by , 29 January 2015

Earlier today, Lonmin released its production report for its first quarter.

The platinum producer, which is the world's third largest, said it plans to keep output unchanged, but is cutting costs.

Let's take a closer look at what Lonmin revealed…

Lonmin plans to cut spending by 26%

Lonmin [JSE:LON] says it “will cut its capital expenditure” for this year as the near term prospects for the price of platinum are uncertain, reports BDLive. Prices of platinum group metals have been under pressure as worries over “slowing growth in Europe and Asia” will impact demand.

The platinum producer plans to cut capital expenditure by 26%, notes MineWeb. Lonmin has also had to contend with “furnace breakdowns,” which have impacted its output.

This means the company is now committed to cutting spending to $185 million, down from $250 million, says Fin24. But Lonmin says it will “keep this under review”.

Lonmin will keep to its production target for the year

In spite of this, the company said it will “maintain its annual production target,” adds Fin24. Lonmin, along with Anglo American Platinum and Impala Platinum, endured a five-month long strike last year as workers downed tools over wage demands.

Over the past 12-months, Lonmin’s share price has nearly declined 50%, notes the SABC.

In the report, Lonmin says that it saw a rise in platinum sales of 9% to 146,890 ounces in the three-months to the end of December, reports MineWeb. But it said that over the same period, “the average basket price of platinum group metals was 7.1% lower”.

At time of writing, shares in Lonmin were trading 0.68% lower, against a drop of 0.27% in the Top 40 Index.

Platinum producers continue to feel the effects of lower platinum prices.

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Lonmin is to slash costs as the platinum price remains under pressure
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