Lonmin slides into the red
Miner Lonmin slipped into the red due to weak prices and lower output, but said a revival in car and jewellery demand would pave the way for a recovery to begin next year.
Lonmin, the world’s third biggest platinum producer, made a pre-tax loss of $272m (£162m) in the year to 30 September, against a $779m profit a year ago. The group, listed in London and Johannesburg, said 2009 had been tough due to lower prices and currency volatility, causing revenues to drop by more than half to $1.06bn.
Lonmin, whose mines are located in South Africa, said it would not pay a final dividend due to uncertainty in 2010. It said while 2010 would stay tough, platinum demand was likely to improve next year due to a steady recovery in the car and industrial markets. This cheered investors, and its shares closed up 9.3 per cent at 1,740p.
Continuing demand in the Asian jewellery market was also expected to underpin platinum prices. “We’ll see a gradual recovery during 2010, with supply shortages expected from 2011 onwards,” chief executive Ian Farmer said.
The price of platinum — used in jewellery and in catalysts to clean pollution from vehicle exhausts — has recovered by about 50 per cent to $1,400 per ounce this year, but is still well below the peak of $2,290 touched in 2008.