Amplats to shed 14 000 jobs

2013-01-15 11:19

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Anglo American Platinum, the world's top platinum producer, said it will mothball two South African mines, sell another and cut 14 000 jobs in moves to restore profits that may provoke a repeat of last year's strikes when about 50 people died.

In a long-awaited review, announced today, that is seen as crucial to the flagging fortunes of Anglo American, which owns about 80% of Amplats, the platinum producer said it aimed to cut output by around a fifth, or 400 000 ounces.

The price of platinum rose 1.6% in response, leaping past gold for the first time in 10 months.

Labour reaction was swift, with an Amplats labour leader threatening a strike across its South African operations if the indefinite closures, when they would be put on "care and maintenance", go ahead.

"If they put any shaft on care and maintenance, all of the operations will go on strike. Nothing like this will be allowed," said Evans Ramogka, an Amplats labour leader in the platinum belt city of Rustenburg, which will bear the brunt of the job cuts.

Activists brought many of South Africa's platinum and gold mines to a standstill last year in a wave of violent wildcat strikes. The unrest was rooted in a union turf war and aggravated by income disparities within the industry and low wages for dangerous work.

If 14 000 jobs are lost, it will represent about 3% of South Africa's mine-labour force and set back government efforts to cut unemployment from over 25%.

The governing ANC is losing support among mine workers before general elections next year. The National Union of Mineworkers (NUM), a base of ANC electoral support, is rapidly losing members to the militant Association of Mineworkers and Construction Union (AMCU) and other groups.

"As the NUM we are extremely disturbed by these job losses and we are asking workers to be united to defend their jobs," NUM general secretary Frans Baleni told Reuters.

Amplats said yesterday it probably fell to a full-year loss because of the 2012 strikes, which were centred on Rustenburg.

It said two of its mines in Rustenburg, Khuseleka and Khomanani, would be put on "long-term care and maintenance" – when mines are maintained so that they could be reopened in future, but are not operated – because of their high costs.

Amplats also said it would "divest the Union mines at the right time – to maximise value under different ownership".

Reuters reported yesterday Amplats was likely to sell Union.

Amplats chief executive Chris Griffith said on a conference call with reporters that the proposals were not a short-term response but were vital to "save the company".

"We must evolve to align the business with our expectations of the platinum market's long-term dynamics and address the structural changes that have eroded profitability over time," he said.

The proposals will have to be pushed through by new Anglo American chief executive Mark Cutifani, who will take over from Cynthia Carroll in April.

Cutifani hailed South Africa as an investment destination as he turned around bullion producer AngloGold Ashanti. He is also a realist who will want to deliver for shareholders.

Investors applauded the moves.

"It's good that they've made a good, strong first move and this will place them on a great footing to profit when the cycle does turn," said Nic Norman-Smith, chief investment officer at Lentus Asset Management in Johannesburg, which owns Amplats shares.

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