Lonmin revealed yesterday (24th June) that it may need to call on the support of third parties to process its platinum ore after shutting down its Number One furnace.

The South African smelting facility was closed after workers reported a matte run-out, which was subsequently found to have been caused by a water leak in the system.

With repairs set to take roughly 30 days, the world's third-largest platinum producer has concerns over its ability to provide metal for sale and could be about to take action.

Chief Executive Ian Farmer told Bloomberg that seeking external help is "something we're looking at internally", although he conceded that such a move would come at a "commercial cost".

He also noted that increased safety-related government interventions, breakdowns, strikes and an earlier accident have all badly affected output at the furnace in the fiscal year to date.

The company lost about 40,000 tonnes of ore production in the first quarter, 120,000 tonnes in the second quarter and 160,000 in the third quarter in the year through September.

Lonmin has a long history of problems at the furnace and despite rebuilding it in 2007, some market observers are not convinced that the London-based firm has conquered the issues.

"With investigations ongoing into why the furnace failed yet again, we worry that the company is no nearer a final solution to its problems," said Charles Kernot, an Analyst at Evolution Securities, in a noted quoted by the news provider.

However, Mr Farmer countered by suggesting that the repairs will now be carried out quicker and cheaper due to the furnace restructuring, while also noting that leaks are not uncommon is such facilities.

A research report from Liberum Capital, also quoted by the news provider, appeared to confirm that belief, stating that the problem is "not as bad as the market may have feared".

However, the company also admitted that Lonmin's earlier platinum production forecasts of 734,000 oz in 2009 and 792,000 oz now look "aggressive".

Source:

Lonmin May Ask Third Parties to Process Platinum Ore (Update1) (24/06/09)

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