Mining Journal > Production and Markets > Lonmin set to miss sales goal

Production and Markets

Lonmin plc, the world’s third- biggest platinum producer, probably will miss an annual sales goal after a leak forced the shutdown of a South African furnace, Investec Bank plc said.
     The company is “likely” to fall short of a target of selling 700,000oz of the metal in the fiscal year through to September, Investec said in a research note. Lonmin slid as much as 9.2% in London trading. Officials at the London-based company weren’t available when Bloomberg telephoned seeking comment.
     Repairing the No. 1 furnace will take about 30 days, Lonmin said today in a Regulatory News Service statement. An accident at the furnace affected production last year, among the plant and equipment breakdowns, labour strikes and safety stoppages that led to Ian Farmer’s appointment as chief executive in September.
     “Lonmin has put a lot of effort into convincing the market it has solved the furnace problems,” Investec said. “There is clearly still an issue.”
     Smaller plants have started up to ease the impact, Lonmin said. One month’s lost production would equate to about 65,000oz, or about 1% of annual industry mined production, Liberum Capital said in a separate research note.
     The leak is “clearly an early setback for the new Lonmin management,” Liberum said. The furnace was recently the company’s only one in operation after a reorganisation, the brokerage firm added.
     Lonmin dropped £1.31, or 9.1%, to £13.10 pence in mid-morning trade in London, leading declines in the Dow Jones Stoxx 600 Index. The shares have slid 55% in the past year as commodity prices plunged because of the world recession.
     Platinum for immediate delivery fell US$24.65, or 2%, to US$1,229.85/oz. Still, the production disruption is “positive news” for the metal’s price and may help to drain suppliers’ stocks, Liberum said.
     Lonmin and Anglo Platinum Ltd, the world’s biggest producer, have suspended some operations in South Africa and announced about 17,000 job cuts combined after platinum prices plunged from a record US$2,251/oz in March last year.
     Lonmin said it will update investors later on the leak’s effect on production and sales for the 2009 financial year. The company rebuilt the furnace in 2007 after it developed a leak in 2006. Further repairs were made early last year and the operation restarted in March. The furnace was offline from November of last year through January for design changes.