Shut mines must lose rights

2013-01-20 10:00

ANC boss talks tough to stem job losses.

The ANC fears that the plan by Anglo American Platinum (Amplats) to retrench 14?000?workers would open the floodgates for lay-offs in the mining ­sector.

The governing party discussed the mooted retrenchments, which rocked South Africa’s mining sector this week, at its Thursday national executive committee (NEC) meeting.

Describing the plan as “reckless”, ANC secretary-general Gwede Mantashe said it was “not on” for the ­company to temporarily “mothball” mining shafts when the country is grappling with high unemployment levels.

He said more companies could follow Amplats’ lead if government took no ­action.

“From where I am sitting, the ­Amplats case is just testing the waters. If nothing happens you’ll see a flood of these companies (doing the same),” Mantashe said.

South Africa’s gold and platinum ­sectors, in particular, are still counting the cost of the crippling strikes that brought most of the industry to a halt for almost two months in 2012.

Mantashe cast doubt on whether or not the unfavourable conditions in the mining industry would affect government’s target of creating 140?000 new direct jobs in the sector by 2020, as per government’s New Growth Path policy.

He said government would not revise this target.

The ANC has threatened to revoke the mining right of any company that temporarily mothballs a mine and sheds jobs in the process.

“The proposal we have put to the (mineral resources) ministry is that mines that want to mothball shafts must actually give up the licences for those shafts for public auction for those companies that want to operate them,” said Mantashe.

Amplats announced its intention to shut down four shafts in the Rustenburg area and axe 14?000 workers, but it still wants to retain ownership of the closed assets in case the ­prospects for their profitability improve.

An initial war of words ­between Amplats and Mining Minister Susan Shabangu earlier this week about the ­announcement later gave way to more amicable talks between the two parties.

“Anglo American Platinum and the department of mineral resources have agreed to engage positively during the next 90 days to discuss the business review proposals and to determine how they can best work together,” Amplats spokesperson Mpumi Sithole said on Friday after a meeting between the company and Shabangu the day before.

Mantashe has, however, continued to lambaste the company, saying the group was “reckless and insensitive” by announcing the retrenchments before proper consultations with labour and the regulator.

He was adamant government should revoke the rights over the mothballed operations, dismissing claims that the state had no power to act in such a way.

“When you mothball (a mine), you are keeping it alive; you want to come back to it,” Mantashe said on Friday at an ANC press conference at Luthuli House.

“You can’t just?.?.?.?sit on proven deposits because they are yours. They can be revoked because you must use a deposit that has been discovered and proven.”

AngloGold Ashanti, an employer of 35?000 workers, is yet to announce the outcome of a review of all its operations.

The review was announced in November by chief executive Mark Cutifani, who was earlier this month appointed to take over the reins at Anglo ­American.

Cutifani last year warned of pending “tough decisions” at AngloGold ­Ashanti as a consequence of the strikes.

Analysts said it was doubtful more platinum companies would announce large-scale cutbacks, although the ­prospects for South Africa’s ageing gold mines were less favourable.

“We don’t think anybody has to ­further adjust their operations,” said Justin Froneman, a platinum analyst at SBG Securities.

Stephen Meintjes, head of research at Imara SP Reid, concurred with Froneman’s view of the platinum industry, but added that the gold industry would ­continue to decline.

Furthermore, new opportunities would be driven by technology, rather than labour, due to the depth of South Africa’s remaining gold resources.

Andrew Mitchell, a director at mining law firm Bell Dewar, said the government regulator would be within its rights to cancel a mining right if companies do not follow the letter of the

law when they change their business plans.

A change in business plan requires the consent of the minister. He stressed the need to do proper consultation when companies embark on such plans, as this requirement is clearly stated in South Africa’s mining law.

“You need to have an open mind and make full disclosure to all the relevant parties,” he said.

However, Peter Leon, head of the mining and energy projects practice at law firm Webber Wentzel, said the state could be liable for expropriation costs should they cancel mining rights.

“The right belongs to government, but the shafts belong to Anglo,” said ­Leon.

“If you take it away, there could be a case of expropriation.”

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