Johannesburg, South Africa — 30 August 2013 – Anglo American Platinum Limited (Amplats) “’ the world’s biggest producer of the precious metal “’ is to fire about 3,300 workers at its South African mines “’ less than a quarter of the original proposal “’ as the company seeks to revive profitability.
A further 1,500 workers have applied for voluntary severance packages, the company said in a statement reported by Bloomberg News, as it proceeds with plans to cut output by 16%. About 1,600 workers will be redeployed elsewhere in the group and 500 will pursue “other opportunities,” Amplats said.
Platinum companies in South Africa are seeking to curb costs after prices dropped and strikes last year led to above-inflation wage gains.
Amplats initially proposed removing 14,000 posts, revising that in May to 6,000 after government and union objections. A further 900 head office jobs would be cut, it said on August 19.
“Through the course of next year we hope to start seeing the benefits of the restructured operations coming through,” CEO Chris Griffith said today on a conference call. Amplats was 0.3% lower at R409.93 in Johannesburg trading by 10:50 a.m. The FTSE/JSE Africa Platinum Mining Index was down 1.7%.
The company’s Rustenburg-based operations, in South Africa’s North West province, are losing more than US$96.7 million every six months, Griffith said. Amplats wants to consolidate five mines with nine shaft systems into three operating mines and reduce annual output by 350,000oz. Production in 2012 was 2.22Moz.
The reorganisation will cost Amplats R2.6 billion, of which R2 billion will be spent in 2013, financial director Bongani Nqwababa said during the call. Amplats expects savings of R3.8 billion rand, starting in 2015.
A one-month notice period for those employees losing their jobs starts on September 2, the Anglo American plc unit said. The company will mitigate the effect of dismissals by temporarily employing 1,200 workers to do mine reclamation and employing a further 400 people in a R171 million housing project.
The platinum miner will be expected to show continued improvement in profitability in 2014, Mark Cutifani, chief executive of 77% shareholder Anglo American, said in an interview.
Amplats needs to deliver a 15% return on capital, in line with the rest of London-based Anglo American’s businesses, Cutifani said. “If we have shafts or operations that don’t make money, then we’ll make the tough calls,” Cutifani added.
Amplats had 50,873 employees and 4,245 contract staff at the end of 2012, according to its annual report. The company’s debt rose 26% in the first half of 2013 to R13.2 billion as costs increased and labour unrest curbed output.
The Association of Mineworkers and Construction Union, the biggest labour organisation representing Amplats employees, said it was “disappointed” by the Amplats announcement. The union had expected to hear more detail on the job cuts before the company made its statement, AMCU president Joseph Mathunjwa said by phone.
Source: Bloomberg News. For more information, click here.