Lonmin has scaled back spending plans to weather a platinum price slump that may last two more years.

The world’s third-biggest producer of the metal cut its capital expenditure forecast for this fiscal year to $160-million from $185-million. It also capped yearly spending to September 2017.

“We should possibly see these persistent prices lower for longer,” CEO Ben Magara said on a conference call last week. Lonmin did not expect prices to recover for about two years, the Johannesburg-based company said in an earlier statement.

Lonmin and larger competitors Anglo American Platinum and Impala Platinum Holdings are battling prices that have tumbled 36% since 2011, while salaries and operating costs have climbed. Lonmin plans to cut about 3 500 jobs, or 10% of its wage bill, to save cash.

The company will also spend no more than $150-million in each of the following two fiscal years, according to the statement. This compares with a November forecast of $250-million to $350-million.

Lonmin posted an underlying loss of $77 million, or 10.5c a share, for the fiscal first half to March, compared with profit of $26-million, or 3.5c, a year earlier. Results were buoyed by an increase in platinum-concentrate output to 381,984 ounces, the highest since 2007.

Forecasts Maintained

Lonmin kept forecasts for full-year metal-in-concentrate output at about 750 000 platinum ounces and sales of 730 000 platinum ounces.

“It is encouraging that guidance remains intact,” Investec plc wrote in a note to clients. Lonmin’s Marikana operations, near Rustenberg, are performing well, it said.

The company operates in the North West province of South Africa, which has more than 70% of the world’s platinum reserves. The job cut plan, which will cost it about R400-million ($33-million) this fiscal year, follows a five-month strike over pay in 2014.

“The capital expenditure cuts and pressure on the balance sheet that may be exacerbated by the restructuring costs could add to burdens down the road,” Investec said. “Management likely has little choice.”