Ben Magara, chief executive of platinum producer Lonmin (LON:LMI), has told staff to take unpaid leave because a wage strike at its South African operations by the Association of Mineworkers and Construction Union (AMCU) looks set to continue.
“Given the reality of a prolonged strike and AMCU’s unrealistic demands, we have to make tough decisions to preserve and protect the business by reducing costs and conserving cash,” Ben Magara said in a March 25 memo, according to Reuters.
Earlier this month the company, which closes its financial year in September, said it would not hit its sales guidance of 750,000 ounces of platinum annually, as it has already lost 90,000 ounces since the strike began. Sales would “fall further the longer the protected strike continues”, Lonmin said.
Workers walked out of South Africa’s platinum mines in late January when pay negotiations broke down between management and the AMCU.
So far the strike has cost the country’s platinum industry nearly a billion dollars in revenue.
South Africa, Africa’s largest economy, holds about 80% of the world’s known platinum reserves, accounting for about 70% of global output, used for jewellery, catalytic converters in vehicles, and as a key source of hard currency for the country, among other applications.