Mining sector heading for ‘a jobs blood bath’

2012-09-29 19:18

Prolonged miners’ strikes could render some mines unprofitable and force them to shut down, leading to an unprecedented jobs blood bath, commodity analysts have warned.

This comes in the wake of several strikes – legal and illegal – which have hit the sector, forcing mines like Gold Fields and AngloGold Ashanti to shut down some of their operations completely.

Analysts are unanimous that should union and mine bosses across the sector fail to arrive at amicable settlements in the next three months, some mines will have to shut up shop.

Standard Bank resources analyst Mark Ground said: “There will be closures if hundreds of workers do not return to work and no settlement is found.

“Remember that wage bills account for about 50% of most mines’ expenditure.”

Not only will mines become unviable, they will not be able to invest in capital expansion, said Ground.

He added that giant mining corporations like Anglo American Platinum (Amplats) will not close all their operations, but could opt to shut down unprofitable entities.

Bheki Sibiya, chief executive of the Chamber of Mines, agreed.

“I hope for the sake of workers, the country and mine owners that the situation stabilises, otherwise a lot of mines would have to close down.

“If pressure continues for increments, quite a lot of mines will close down.”

Sibiya said about 59% of the country’s platinum producers were under pressure – breaking even or making losses.

“Platinum mines employ about 200 000 people, meaning that 120 000 jobs are on a knife’s edge.”

He pleaded with miners to respect collective bargaining processes or risk rendering the whole process a farce.

Gold Fields, whose two mines, KDC West and Beatrix, have stopped production as a result of wildcat strikes, said it had lost 35 000 ounces of gold since the strikes began about three weeks ago.

Spokesperson Willie Jacobsz said: “We have lost more than R500 million already.

“The danger is that this is putting mines on the edge. They are suffering terrible losses.

“It makes the future uncertain and the demands will kill the mines.”

Gold Fields workers are demanding monthly salaries of about R16 000, which will increase the lowest-paid workers’ wages by about 400%.

“We hope that they will see that they are destroying the source of their livelihoods.

“They are bringing the industry to its knees.

“Unfortunately, if the mines become unprofitable, we will have no choice but to close them.

“That’s a very real possibility,” said Jacobsz.

Peter Leon, Webber Wentzel’s mining, energy and projects practice head, said although the situation was worrying, it was not beyond control.

“In a worst-case scenario, the mines will became unviable and close down.

“But I don’t want to be alarmist – that’s a worst-case scenario and it will depend on how mine managers and the unions respond to strikes.”

Analysts agreed that since South Africa produced more than 90% of the world’s platinum, prolonged strikes in the sector would send the price of platinum through the roof.

But unfortunately, few local gold miners would benefit from the strike, said Ground.

Since South Africa has lost its place as the world’s number one gold producer, the strikes have had an insignificant bearing on bullion’s prices, he said.

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