Lonmin warns of likely sales miss after strike talks break down

5th Mar 2014 12:57

- Strike negotiations break down as parties 'too far apart'- Lonmin will not make its 2014 sales guidance- Lonmin has lost 90,000oz through the mine strikesNegotiations over mining strikes in South Africa have broken down between Lonmin and Anglo American's Anglo American Platinum (Amplats) and the Association of Mineworkers and Construction Union (AMCU).Lonmin said as the strike action has caused activity at its mining and processing divisions to be "minimal" that it would now not achieve its sales guidance of 750,000 platinum ounces and now expects sales for the full year ending September 30th 2014 to fall further the longer the protected strike continues.As of Wednesday the company said it has lost around 90,000 saleable platinum ounces. The Commission for Conciliation, Mediation and Arbitration (CCMA), which had been facilitating and mediating negotiations between the parties, has suspended the process as it deemed "the respective parties' current position to be too far apart to warrant further mediation at this stage".Lonmin, Amplats and Impala Platinum (Implats) have proposed a three-year wage agreement on a guaranteed package that Lonmin said was "well above the current South African inflation rate" and was more favourable in comparison to increases in other industries. But a statement from Lonmin argued that AMCU's revised demand on Tuesday evening of a basic wage of 12,500 rand over four years "still represents an increase of 30% in year one. This is unaffordable."Chief Executive Ben Magara said: "We and Amplats and Implats remain, as we have been throughout this process, committed to finding a positive and sustainable resolution to the dispute in the interest of all our stakeholders and importantly for the sustainability of our business." He added: "The longer the strike continues, the greater the impact on our higher cost shafts, our ability to return to a normal operating environment and obviously on jobs. "We hope that AMCU will consult its membership on these latest developments and come to appreciate the importance of resolving the wage dispute without undermining the sustainability and employment prospects of this company and indeed the industry. We continue to review our options to safeguard the business."Shares in Lonmin tumbled 2.4% lower on the news. Anglo American's shares were up 0.87% at 12:45 on Wednesday.OH