Anglo American Platinum Ltd. (AMS) will fire about 3,300 workers at its South African mines, less than a quarter of an original proposal, as the biggest producer of the metal seeks to revive profitability.
A further 1,500 workers have applied for voluntary severance packages, the Johannesburg-based company known as Amplats said in a statement today, as it proceeds with plans to cut output by 16 percent. About 1,600 workers will be redeployed elsewhere in the group and 500 will pursue “other opportunities,” Amplats said.
Platinum companies in South Africa, which has the largest known reserves, 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 will be cut, it said Aug. 19.
“Through the course of next year we hope to start seeing the benefits of the restructured operations coming through,” Chief Executive Officer Chris Griffith said today on a conference call. Amplats closed 0.3 percent lower at 409.75 rand in Johannesburg. The FTSE/JSE Africa Platinum Mining Index was down 1.5 percent.
The company’s Rustenburg-based operations, in South Africa’s North West province, are losing more than 1 billion rand ($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 350,000 ounces. Production in 2012 was 2.22 million ounces.
The reorganization will cost Amplats 2.6 billion rand, of which 2 billion rand will be spent in 2013, Financial Director Bongani Nqwababa said during the call. Amplats expects savings of 3.8 billion rand starting 2015.
A one-month notice period for those employees losing their jobs starts Sept. 2, the Anglo American Plc (AAL) 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 171 million-rand housing project.
The platinum miner will be expected to show continued improvement in profitability in 2014, Mark Cutifani, chief executive of 77 percent shareholder Anglo American, said in an interview yesterday.
Amplats needs to deliver a 15 percent 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 said.
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 percent in the first half of 2013 to 13.2 billion rand as costs increased and labor unrest curbed output.
The Association of Mineworkers and Construction Union, the biggest labor organization representing Amplats employees, said it was “disappointed” by Amplats’ announcement today. 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.
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