Lonmin Plc (LMI.L: Quote) (LONJ.J: Quote), the world's third-biggest platinum producer, dismissed 5,530 workers at its South African operations after demand plummeted due to the auto industry downturn, a union said.

Solidarity union said only 271 of the full-time workers were cut through a forced retrenchment process. The other 3,009 full-time employees opted for voluntary retrenchment packages, while the remaining 2,250 were contractors.

The retrenchment process cost Lonmin approximately $44 million, but according to the group's calculations eventually saves the company about $90 million in staff costs, Solidarity said in a statement. Lonmin is making the cuts to survive the market downturn following a big drop in demand for platinum from car makers, the biggest user of the metal, which has sent platinum prices tumbling more than 50 percent from its highest peak last year.

(Reporting by Agnieszka Flak)© Thomson Reuters 2009 All rights reserved