JOHANNESBURG/LONDON (Reuters) - Platinum producer Lonmin (LMI.L) said on Thursday community protesters demanding 1,000 jobs were disrupting output, damaging property and intimidating employees around its Marikana and other operations in South Africa.
The Lonmin ructions are the latest flare-up on South Africa’s restless platinum belt between impoverished communities seeking a bigger slice of the mineral pie and companies grappling with depressed prices and rising costs.
Lonmin said production at two shafts had stopped because of the protests and its output losses amounted to around 40 million rand (£2.3 million) over seven days, but it could not meet the protesters’ demands for jobs.
“These demands are not realistic in the current economic climate and cannot be acceded to without threatening the sustainability of the business,” Lonmin said in a statement.
“Lonmin has recently undergone a restructuring, in close consultation with its recognised union, and significantly reduced its workforce as a result. It simply cannot absorb additional employees at this stage,” it said.
The London-listed company, which has all its mines in South Africa, has been hamstrung for years by stubbornly low platinum prices, soaring costs and strikes, forcing it to bring out the begging bowl to investors twice in the last five years.
“The temporary closure of these shafts is the right move. Safety first, production issues later. You don’t want another ‘Marikana’,” said Momentum SP Reid mining analyst Sibonginkosi Nyanga, referring to a 2012 incident where police shot dead 34 Lonmin miners taking part in a violent wildcat strike.
Nyanga said the latest protests were another public relations disaster and setback for struggling Lonmin.
Lonmin’s $400 million (£310.9 million) rights issue in December 2015 was undersubscribed even though it was deeply discounted, revealing investors’ eroding faith in a turnaround.
Lonmin said in January it was reviewing capital expenditure. Its first-half results are due on Monday.
Lonmin is not the only platinum producer hit by community protests in South Africa, which sits on over 70 percent of known global reserves of the precious metal used for emissions-capping catalytic converters in the auto industry.
Impala Platinum (IMPJ.J) says low prices and social unrest could lead to large-scale job losses at its Marula mine, a flashpoint for labour tensions in the past.
Anglo American Platinum (AMSJ.J) has had similar problems around its Mogalakwena mine, the company’s most profitable operation and the world’s largest open-pit platinum mine.
In Lonmin’s case, the community in question is the Bapo ba Mogale, which has equity in Lonmin through an investment company set up by its traditional council and which has been given opportunities to supply services to the mines.
South Africa’s unemployment rate is 26.5 percent and income disparities are glaring, a combustible mix atop some of the world’s richest mineral reserves.
Addtional reporting by Zandi Shabalala in London; Editing by James Macharia/Mark Potter/Susan Fenton