Lonmin to cut spending and maintain production target in 2015

Platinum producer Lonmin said it will cut spending in 2015, as it aims to fight low metal prices, but promised to maintain its annual production target.

The South Africa-focused group, the world’s third-biggest platinum producer, reported an increase in production but added that two furnaces had to be stopped because of technical issues, leading to a 28.8% decline year-on-year in production in December.

Along with its sector-peers, the company has been hit by low platinum prices, soaring costs and labour unrest over wages in 2014.

"Because of low dollar metal prices and short- to medium-term uncertainty around platinum prices we will reduce our expected capital expenditure for 2015 from $250m to $185m and will keep this under review," the company said in a statement.

Lonmin added it was maintaining its production guidance for the full year at 730,000 platinum ounces and cost guidance of around R10,800 (£614.39) per ounce.

“While the mining operations and concentrate production seems to be performing well, Lonmin has suffered from continuing difficulties in the processing side of the business,” broker SP Angel said in a note on Thursday.

“Price uncertainty has prompted a prudent response on the capital investment side of the business and, provided the smelters can perform in the latter part of the year there should be a recovery as the backlog of concentrate is processed.”

Lonmin shares were down 0.36% to 164.60p at 11:29 on Thursday.