Amplats lashed after plan to cut 6?000 jobs

2013-05-12 14:01

Platinum producer’s compromise restructuring move draws ire from markets and unions after it opts to close one less shaft

Anglo American Platinum (Amplats) has relented on its long-standing proposal to cut up to 14?000 jobs at the group’s Rustenburg operations, but its revised proposition of 6?000 redundancies has only succeeded in making both the unions and the markets unhappy.

The world’s biggest platinum miner on Friday announced an alternative restructuring plan for its lossmaking mines in North West.

Chief executive Chris Griffith said the group would still achieve its intended cost savings of R3.8?billion by 2015 and return the Rustenburg operations to profitability.

It will do this by closing one less shaft than originally anticipated, bringing the number of affected shafts down to three.

According to the new plan on the table, Amplats would permanently close down its Khuseleka 2 as well as Khomanani 1 and 2 shafts.

Khuseleka 1 shaft, as well as some of the associated processing infrastructure originally earmarked for closure, would remain operational.

According to Griffith, the group would now create a bigger mining footprint underneath the remaining shafts in Rustenburg to include the ore bodies of the affected shafts.

This approach would allow the retention of most of the affected shafts’ underground production staff.

“We need to provide more ore resources to fewer shafts,” said Griffith. “That will give us greater scale and fewer overheads.”

According to the original plan, Amplats would have permanently cut 400?000 ounces from its production profile, targeting between 2.1?million and 2.3?million ounces from its remaining operations and joint ventures.

Friday’s proposal would lower total ounces cut to between 320?000 and 350?000 ounces.

The ounces Anglo would remove from delivery to the market has been a key consideration, with the entire industry suffering from low prices. Lowering the cutback is bad for the sector as a whole, at least from an investor perspective, as it suppresses the platinum price.

Griffith also undertook, as per the original plan, to offset the number of redundancies with alternative job-creation strategies in construction and other activities.

Amplats’ first announcement in January about its restructuring plans and accompanying section 189 process led to an outcry from the ANC and Mineral Resources Miniser Susan Shabangu, who accused the union of failing to consult with its regulator, the department of mineral resources (DMR). Thinly veiled threats to somehow revoke the giant’s mining rights ensued, leading to jitters throughout the sector.

The company subsequently suspended the section 189 process to start consultations with the DMR, a process that was overseen by the department’s director-general, Thibedi Ramontja.

The closing date for the consultations was extended twice, before labour unions were briefed for the first time about the outcome on Thursday.

A union official who attended Thursday’s meeting said Amplats presented two options to the attendees. The first alternative was the proposal on Friday, while the second plan involved even fewer immediate job cuts over the short term, but with the prospect of more drastic measures in the not-too-distant future.

Commenting on the talks with the DMR, Griffith said Amplats’ change of heart was not because of excessive political pressure.

“We didn’t cave in to government,” said Griffith. “This is the outcome of a consultative process.”

He said the jobs savings would be achieved by a combination of about 4?500 staff who would remain at Khusasaleka 1 shaft, the filling of 1?000 vacancies at unaffected shafts, 500 jobs that were originally earmarked to be lost at the processing division, as well as the redeployment of about 1?000 contractors.

But labour unions remained less than impressed with the revised proposal, saying they believe there was room for a further reduction in the number of job cuts.

“This is still a big crisis,” said spokesperson for the National Union of Mineworkers, Lesiba Seshoka. “It is not an achievement for anybody.”

He said the union stood by its point of view that the mining rights over the affected shafts had to be auctioned to another party.

Franz Stehring, a divisional manager at the United Association of SA, said his union would scrutinise the revised proposals vigorously.

“Wherever we can save more jobs, we will,” said Stehring.

The new proposals also received the thumbs down from the market, with Amplats’ share price trading 3.5% lower following the announcement at R333.

The company suffered an operating loss of R6.3?billion in 2012 and a thorough restructuring of its mines was viewed as essential to its long-term prospects.

The platinum price fell on Friday as did the share prices of all the major platinum producers.

Amplats’ share price fell 4.5% at close of trade on Friday, while Impala lost 5.4%. Lonmin shares fell 7.66%.

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