Shares in UK mining firm Lonmin plunged after it announced 6,000 jobs cuts in South Africa as part of a scaling back of its operations due to the falling price of platinum.
In a quarterly production statement it warned it was heading for an annual loss at current platinum prices.
The price of platinum has fallen by 14.4% from $1,126 per ounce in March to $964 on Wednesday.
Shares were down 13% at lunchtime following the announcement.
They had lost 17% initially falling to a 10 year low,
Lonmin said it would mothball several platinum mine shafts to cut costs.
It said the closures would result in a “smaller more sustainable and agile business”.
The miner added it expected normal platinum production over the next two financial years to fall by 100,000 ounces.
“Our objective is to save the majority of the positions in the company and create a sustainable business by taking urgent action and maximising liquidity to protect the business.
“All costs, not just labour costs, have to be reduced and productivity improved if the business is to be sustainable,” Lonmin added.
The miner added it was reviewing the capital structure for the company given the “new pricing environment” and was considering the whether to re-finance its debt.
Platinum sales for the quarter were 231,778 ounces. That was in-line with refined production expectations and compared with sales of 206,039 ounces for the same period a year earlier.
But Lonmin said despite the increase in production the weaker price of the precious metal and the weakness of the South African rand had continued to hurt profits.
The platinum US dollar price decreased by 23.2% the same period a year earlier.
Meanwhile, the South African rand basket price of R10,861 per ounce was 12% higher than a year earlier, hit by rand weakness after the average rand to dollar exchange rate weakened by 14.9% in the past year.
South Africa’s National Union of Mineworkers (NUM) said on Friday it was “shocked” by the decision to cut so many jobs and promised to fight them.
“As the NUM, we are going to fight against any job losses. It is very painful to see that these mining companies take the decisions of cutting jobs easy,” the union said in a statement.
The mine closures come three years after 34 people were killed after police opened fire on striking Lonmin miners in what has become known in the country as the “Marikana Massacre”.
The Lonmin-owned platinum mine became the centre of a violent clashes between police and strikers following a pay dispute with Lonmin that was exacerbated by tensions between two rival trade unions.