Officials at Anglo American Platinum (Amplats), the world’s largest platinum producer, announced they will cut 6,000 South African mining jobs—though 50% less than the 14,000 initially proposed—seeking restored profitability without hostility from the government or trade unions.
Representatives of Amplats also announced they intend to keep open one of four shafts slated for closure near Rustenburg. Production for 2013, officials added, would be cut by 10% or 250,000 oz—equal to nearly 5% of global output. A further 100,000 oz will be lost in the medium term.
The plan, first announced during the first quarter of 2013, aims to reduce output by 400,000 oz. The job reductions will not bode well for the African National Congress, which has ruled the country since the fall of Apartheid in 1994, with 2014 elections near. Sub-Saharan Africa’s biggest economy now has a 25% unemployment rate.
Amplats CEO Chris Griffith said the company will begin worker negotiations by the third quarter, while emphasizing gradual layoffs—potentially 3,000 to 4,000 annually—with proposals for early retirement for 1,500 employees over 55. And while those job cuts are less than initial forecasts, union reps were far from happy. But for Amplats, cost reductions for platinum output are crucial for reverting to profit. The company now aims to produce 2.2 million to 2.4 million oz/y, up from 2.1 million to 2.3 million oz/y estimates.
Meanwhile, unrest is looming as Association of Mineworkers and Construction Union (AMCU) leaders said they would not tolerate any job losses. A turf war between AMCU and the National Union of Mineworkers lead to more than 50 deaths last year with strikes hitting Amplats with its first losses in 2012.