JOHANNESBURG (miningweekly.com) – An upturn in the platinum price is needed for the sustainability of the platinum industry as a whole, Lonmin CEO Ben Magara said on Friday.
The head of the large London- and Johannesburg-listed platinum mining company said that although there had been a slight price recovery since November and that the exchange rate had helped a lot, platinum continues to be under stress. (Also watch attached Creamer Media video).
“The anxiety I now have is that this price needs to turn and that’s crucial for the sustainability of our business and the platinum industry as a whole,” Magara said.
Despite years of underinvestment in platinum mining capacity and lower production from South Africa, the prime producing region, the market has not responded with a better platinum price.
“The current prices are really damaging the industry and the extent of the underinvestment in this industry is such that some of that damage is going to end up being irreparable. When demand returns, the platinum price will climb much higher. But prices being fantastic and then poor do not help anyone,” he told journalists at a media conference attended by Mining Weekly Online.
He spoke after Lonmin executive VP human resources Abey Kgotle outlined the major housing programmes that are being undertaken to accommodate the 33 000 workforce and after Lonmin group head communications and branding Wendy Tlou drew attention to Lonmin’s swing back into an underlying operating profit of $7-million for the full year, compared with the underlying operating loss of $134-million posted the year before.
But the low-price environment is debilitating to the industry, against the background of President Jacob Zuma, through the Department of Mineral Resources (DMR), asking Lonmin for a compliant housing plan and warning that the DMR might revoke the company’s mining rights if it did not comply.
The President was giving an update on steps taken by various government departments to implement the Farlam Commission of Inquiry’s recommendations.
Lonmin has already implemented a number of measures as part of its ongoing housing plan and has completed the conversion of all hostels into family units.
It is continuing to take proactive steps to meet its obligations, despite the unfavourable economic climate, by including long-term, sustainable housing solutions in its capital expenditure budgets.
“From the numbers you have heard, we’re probably 50% there,” Magara said as he expressed the hope that current prices would soon be a thing of the past.
“We know the world needs these platinum-group metals (PGMs). There are no better metals for autocatalysis than PGMs,” he said.
Mining very narrow tabular hard rock reef would ensure that the company provided jobs for a long time.
“It’s going to remain quite labour intensive for a pretty while… simply because that’s the nature of the deposit we’re mining, which means we have to be able to handle conflict and navigate any political or operational challenges we are going through,” he added.
The company has managed to reduce its workforce by 6 000 people to 33 000 people without industrial unrest and has negotiated a three-year wage agreement believed to be realistic without losing production.