By Silvia Antonioli and Ed Stoddard
CAPE TOWN Feb 4 Higher stocks than usual are
helping South African platinum producer Lonmin to cope
with mining strikes that are paralising its production, its
chief executive said on Tuesday.
The world's No. 3 platinum producer is losing about 3,100
ounces of refined output a day due to a strike over wages, which
started almost two weeks ago and has also hit bigger rivals
Anglo American Platinum and Impala Platinum.
"We have been very fortunate in the sense that the
performance of 2013 gave us some breathing space," Chief
Executive Ben Magara told Reuters on the sidelines of a mining
conference in Cape Town.
"In terms of our inventories, in the first quarter we have
produced more than we have sold because we really wanted to just
make sure we had some arrangements to meet our customers'
(demand) and make sure that relationship is sustained," he said.
In the three months to Dec. 31, the first quarter of its
financial year, Lonmin's refined production increased by 45
percent year-on-year to 196,249 saleable platinum ounces.
Sales for the quarter, however, were up just 24 percent to
"In general, at the end of the year you empty everything ...
but last year we ended up with some reasonable stocks, so I
think we are in a much better position than we were before,"
Wage talks between South Africa's Association of Mineworkers
and Construction Union (AMCU) union and the world's top three
platinum producers resumed on Tuesday to try to end the strike
that has seen outbreaks of violence and is costing Africa's
biggest economy an estimated $36 million a day.
The strike has halted production on about 40 percent of
global platinum supply, according to estimates by Thomson
Companies have said they cannot afford the demands to double
miners' pay, and Magara said the latest offers of about 9
percent were more than reasonable, given an inflation rate of
"This industry is extremely under stress ... we are doing
everything to maintain costs. The mines are getting deeper, they
need refrigeration and the grades are getting lower so it's
extremely challenging and we cannot afford to meet the demands
that are on the table," he said.
"We have put an offer that is way beyond inflation and we
believe that is really a reasonable offer and it's what we can
afford as a business," he said.
He also said he hoped AMCU, known for its uncompromising
stance in wage negotiations, would understand that the
sustainability of the company was on the line.
"I hope AMCU colleagues will realise that we are
compromising the sustainability of our business if we give in to
certain demands," Magara said.
AMCU emerged as the top union on the platinum belt after
poaching tens of thousands of members from the once unrivalled
National Union of Mineworkers (NUM) in a bloody turf war in 2012
that killed dozens of people and rumbles on.
About 100,000 workers are either on strike or being
prevented from reporting for duty in the platinum shafts
northwest of Johannesburg.
This has dealt a blow to investor confidence in the country
that produces over 70 percent of global supplies of the precious
metal used for emissions-capping catalytic converters in cars.