Lonmin woes pile up as its chief will be off sick for 'some months'

 

Lonmin's troubles continued to mount yesterday as the owner of the South African platinum mine where police shot dead 34 workers last week announced that its chief executive, Ian Farmer, would be off work for "some months".

A week after Mr Farmer was diagnosed with a serious illness and taken to hospital, a spokesman for the London-listed miner said "he has commenced a course of treatment and it will be some months before he is able to return full time".

Simon Scott, Lonmin's chief financial officer, who joined in 2010 from the South African infrastructure company Aveng Group, will fill in until he returns. Mr Farmer's absence comes at an extremely difficult time for Lonmin, which was already being squeezed by a combination of falling platinum prices and rising production costs even before 3,000 rock drillers began a wildcat strike at its key Marikana platinum mine in South Africa two weeks ago.

The mine has since been the scene of 44 deaths in total, as rival trade unions clashed with police, Lonmin security staff and each other, although the violence has subsided in recent days.

However, the mine has not produced a single ounce of platinum since the strikes began because less than a third of the miners have returned to work, with some too scared to return, while others remain on strike.

The fallout has forced Lonmin to issue a profits warning, admit it's in danger of breaching its debt covenants and concede it may have to tap investors for money with a rights issue that could seek to raise as much as $1bn (£630m).

The South African mining industry remains on high alert over the prospect that Lonmin's troubles at Marikana will spread across the country, even though Anglo American Platinum said about 100 workers who had refused to go underground returned to work yesterday.

"All employees have now reported for work," the company said in a statement, adding that talks between management and representatives among the workers had ended on a "positive" note.

Lonmin's shares fell by 13p to 627p.

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