EDITORIAL: Lonmin woes a mining portent
The government should watch what is happening at Lonmin and worry rather than pretend all is well
Platinum miner Lonmin’s woes are a canary in the coal mine for SA’s mining sector, although in this case it is of course a platinum mine. The industry is being squeezed on no fewer than four fronts simultaneously: low commodity prices, a rand exchange rate that is weak but not weak enough to magically make poorly performing mines profitable; a labour relations struggle and an unthinking government seemingly determined to drive the industry into the dust. Lonmin reported a $214m loss for the six months to March compared with a $6m loss the year before, while revenue fell $29m to $486m. As a result, the share price has fallen to about R17. This is substantially less than the R21 a share at which the Public Investment Corporation invested to underpin the company’s latest emergency capital-raising exercise, which has left public servants holding 30% of the company. It was trading at about R200 just a few years ago. Lonmin can and has managed the situation by reducing capex, but its room...
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