Anglo American Platinum Ltd., the biggest producer of the metal, put plans on hold to cut as many as 14,000 jobs in South Africa following criticism from the government.
The company, controlled by Anglo American Plc, said it will postpone a decision on cuts for as many as 60 days to allow for a “detailed consultation” with the Department of Mineral Resources and unions after meeting in Pretoria.
Anglo American Platinum, or Amplats, announced proposals Jan. 15 to shut four mine shafts to curb costs. It’s among mining companies in South Africa grappling with higher expenses following strikes last year. Politicians and unions attacked the plans, with Mines Minister Susan Shabangu saying licenses could be revoked and African National Congress Secretary-General Gwede Mantashe accusing Anglo of having “stolen our money.”
“The situation for the platinum industry is dire,” Amplats Chief Executive Officer Chris Griffith said on Johannesburg-based SAfm radio today. “Collectively there may be, even with the help of government, potential to reduce the amount of affected employees.”
The stock rose 0.9 percent to 444 rand by the close in Johannesburg, a fourth day of gains.
The department and labor unions are more comfortable with the consultation process taking place outside of South Africa’s Labour Relations Act, which governs the process of potential job cuts, Griffith said. Under the act, talks are held with a facilitator appointed by the Commission for Conciliation, Mediation and Arbitration.
“It’s important that I don’t prejudge the process,” he said. “We’ve had some constructive engagement with the DMR; with our regulator we’re in a much better place. With labor we always have this consultation process. We’ve still got some work to do with the ANC.”
Under Amplats’s existing plan, the company would cut 400,000 ounces of platinum production annually, or 7 percent of global output, to help return to profitability.
“We upgraded our recommendation from sell to hold on the back of the original strategic review because we thought they were doing the right thing and obviously government interference is a bit of a tough one on a business level,” Justin Froneman, an analyst at SBG Securities Ltd., said by phone from Johannesburg.
Producers in the continent’s largest economy shut nine platinum-mine shafts and dismissed 3,332 workers in the second half of last year, according to the Department of Mineral Resources. Strikes have led to above-inflation wage gains as companies face higher production costs.
“We are very confident that in the 60 days we should be able to reach” a permanent solution, Lesiba Seshoka, a spokesman for the National Union of Mineworkers, said yesterday in a phone interview. Zingaphi Jakuja, a spokeswoman for the Department of Mineral Resources, didn’t answer calls.
Amplats said Jan. 14 it would post a 2012 loss because of walkouts by mineworkers that cut its output by 306,000 ounces.
“The fact is that these guys were burning money, they’re going to continue to burn money unless they turn those assets around tomorrow, which is highly unlikely,” Froneman said.