[miningmx.com] — THE ongoing strike at Lonmin’s operations has
claimed its first operational casualty as the company announced the closure of its K4
shaft, warning that more shutdowns could follow should the work stoppage be allowed
to carrry on.
In an operational update posted on Monday, Lonmin said that it would be placing the
K4 shaft under care and maintenance and has already given contractor Murray &
Roberts (M&R) notice of this decision with effect from October 17. M&R supplies
around 1,200 employees at K4.
The strike is furthermore expected to cost Lonmin between 50,000oz and 65,000oz in
lost production during the group’s current financial year (to end-September).
Lonmin said it expected sales for the period to be in a range of between 685,000oz
and 700,000oz, down from its original guidance of 750,000oz. The company also
expected its guidance of a 8.5% increase in unit costs to be exceeded.
The halting of K4 stemmed from Lonmin’s earlier announcement in July that it was
deferring capital expenditure at the K4, Hossy and Saffy shafts. At the time, the
company said that it was cutting its capex forecasts for the 2013 and 2014 financial
years to $250m per year – from around $450m per year – in light of the weak
platinum pricing environment.
“A further announcement on the broader implications of this decision will be made in
due course,’ the company said.
Acting CEO Scott Simon said that there would be more consequences to jobs should
there be a continued delay in returning to production. The work stoppage has entered
its sixth week since some 3,000 rock drill operators embarked on an unprotected on
August 10.
“The situation is delicate, but we have limited options in terms of managing the trade-
off between lost production, higher wages and business rationalisation, including a
significant reduction in jobs,’ Scott said.
“The unprotected strike has already added pressure to some of our higher cost shafts.
A prolonged delay in production will only force further difficult management
decisions.’
