Business

Lonmin first-half profits plunge

Lonmin, the world's third largest platinum producer, has seen its first-half profits plunge nearly 90% due to higher costs and reduced output.

Production was hit after South African authorities issued safety stoppages on platinum mines across the country.

Labour disputes and social unrest also contributed to weak earnings, the company said.

Pre-tax profit in the six months to 31 March fell to $18m (£11.2m) from $159m in the same period a year earlier.

Revenue fell to $751m from $938m, it said.

Shares in Lonmin were down 4.6% in afternoon trading.

The safety stoppages are part of an industry-wide drive by the South African government to reduce the number of deaths in the country's mines.

For its part, Lonmin said it was never complacent about safety, but its recent record had been excellent.

'Sticking to plans'

Lonmin's mining operations produced 5.8 million tonnes in the first half of 2012, down 1.7% compared with a year earlier.

The disruptions caused a loss of some 464,000 tonnes, compared with 166,000 tonnes lost in the prior year, the company said.

Average platinum prices were down 10% on the year. The metal is generally used to make jewellery and dental fillings and is also used in some car parts.

Despite the challenges, chief executive Ian Farmer said the company was maintaining its full-year sales guidance.

He said it would stick to its spending plans and ramp up production in the second half of the year.

Mr Farmer said the company would spend $450m this year to improve shafts in a bid to cut costs.

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