Anglo American Platinum Ltd. (AMS) is considering whether it should keep its mines in South Africa’s Rustenburg area, where a strike that’s in its third month has crippled output by the world’s three biggest producers.
The company has “already indicated we’re exiting Union mines; Rustenburg mines are now part of the consideration,” Chris Griffith, the chief executive officer of the Anglo American Plc unit known as Amplats, said in an interview after the company’s annual general meeting in Johannesburg today. “We’re now thinking very seriously: does it form part of the future of this company?”
The biggest operations of Amplats, Impala Platinum Holdings Ltd. (IMP) and Lonmin Plc (LMI) have been halted since Jan. 23 after the Association of Mineworkers and Construction Union led more than 70,000 employees on a strike in support of higher wages. South Africa accounts for more than two-thirds of the world’s mined metal, used for jewelry and catalytic converters in vehicles to reduce harmful emissions.
Amplats, the world’s largest platinum producer, last year lost 7,438 jobs as it merged five mines at its Rustenburg complex into three to help it return to profit. As many as 1,400 positions will be removed this year after reclamation at the closed mines is finished, it said on Feb. 3.
“We had to address the non-profitable production and we’ve done that,” Griffith said. The longer the strike continues, “the longer we have more parts of our portfolio that are loss-making, and Rustenburg is certainly one of those,” he said.
The Rustenburg operations comprise the Thembelani, Bathopele and Siphumelele mines, according to the company’s website.
Amplats’ less labor-intensive mines and open-pit operations would be retained and expanded, Griffith said.
Amplats, Impala and Lonmin have lost 11.1 billion rand ($1 billion) of revenue since the walkout started, while employees have forfeited 5 billion rand of pay, the producers said on a joint website.
The AMCU demands basic wages be more than doubled within three years to 12,500 rand a month, compared with current minimum pay of 5,000 rand to 6,000 rand. Employers have offered pay increases of as much as 9 percent, compared with South Africa’s inflation rate of 5.9 percent in February.
The company will not take “rash” decisions on the future make-up of its asset portfolio, Amplats Chairman Valli Moosa told shareholders.
The longer the strike endures, “the less likely the companies, communities, families or individuals will be able to recover from the consequences,” Moosa said. “We need a negotiated settlement soon.”
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