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Platinum Producer’s Profits Plunge Due to South African Strike

Violence at Lonmins Marikana Platinum Mine, Rustenburg, South Africa - 16 Aug 2012

The world’s third-largest platinum producer, Lonmin, has seen its earnings plunge because of a monthlong strike at its mines in South Africa.

Underlying operating profits fell to $34 million (£20m) for the six months to March, down from $93 million a year earlier.

Its workers have been demanding higher pay in what has become South Africa’s longest and most costly labor stoppage.

However, they are expected to return to work Wednesday.

“This has been a challenging first half of the year, latterly dominated by protracted industrial action,” said Lonmin chief executive Ben Magara

“Whilst we continue to work to resolve this dispute we have also taken decisive and early action to reduce cash burn, to safeguard our great assets and protect our balance sheet integrity ahead of a safe and successful ramp-up when the strike ends.”

The firm reported a pre-tax loss of $278 million for the six-month period, down from a profit of $54 million a year earlier.

Lonmin’s results were released amid reports two workers were killed at its mines Monday, which may complicate the company’s efforts to end the long-running strike.

South Africa’s National Union of Mineworkers said two of its members were killed as they reported for work at Lonmin’s platinum mine.

Lonmin reportedly confirmed one employee was killed.

The Solidarity union, which mainly represents skilled workers, also claimed its members at Lonmin were being intimidated.

The strike action has arisen from growing discontent among the country’s miners, who feel they are being excluded from the benefits of the country’s resource riches.

As a result, miners have asked for their pay to be doubled, but the mining companies have said they cannot afford to meet the workers’ demands.

The strike has caused a 40 percent drop in global platinum production and affected South Africa’s economy, which depends heavily on mineral exports.

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