Anglo American Platinum Ltd., the biggest producer of the metal, sought to appease government anger by scaling back planned job losses at its South African mines to about 6,000, less than half those originally planned.
The new proposal will see three shafts in the Rustenburg region being idled rather than four, with production capacity to be cut by as much as 350,000 ounces, less than the 400,000 ounces first announced, the Johannesburg-based unit of Anglo American Plc said in a statement today. The plans will now be taken to unions, Chief Executive Officer Chris Griffith said.
Anglo American Platinum, known as Amplats, in January put its plans to fire as many as 14,000 workers on hold after the government threatened to revoke some of its mining licenses. Producers in South Africa are struggling with higher costs as strikes led to above-inflation wage gains, while demand wanes. Amplats had intended to cut 7 percent of global output to help return to profitability.
The proposal is “negative for platinum-group metals’ prices in the short term” as well as for Amplats’ outlook, Eugene King, an analyst at Goldman Sachs Inc., said in an e-mailed note. “The read-across for listed miners in South Africa is negative as it calls into question the ability for management to implement the corrective measures for the benefit of shareholders.”
The shares dropped the most in 2 1/2 months, losing 4.4 percent to 330 rand by the close in Johannesburg. The rand extended a decline against the dollar, weakening 1.3 percent to 9.1401 by 5:20 p.m. in Johannesburg. Platinum fell for the first time in three days, retreating 2 percent to $1,476.16 an ounce.
“If government, labor and business sit down together, you can find a better solution,” South African Finance Minister Pravin Gordhan told reporters in Cape Town. “Bringing down from 14,000 to 6,000 is quite an achievement.”
The cost of the reorganization is expected to be 2.3 billion rand ($253 million), less than the 3.2 billion rand first announced, Griffith said. The producer had 56,379 employees by the end of December, according to its annual report.
“These have to be proposals as one goes into the consultation process,” Griffith said on a conference call. “What they can’t be is us deciding this is a fait accompli and employee representatives and stakeholder representatives have no opportunity to influence that.”
The company had originally planned to reconfigure its Rustenburg operations by shutting the Khuseleka 1 and 2 and Khomanani 1 and 2 shafts, cutting output by 320,000 ounces to 350,000 ounces a year across three mines in the area, it said in January. Khuseleka 1 will remain operational, retaining 4,500 jobs, Griffith said.
The new plan will cut output by 250,000 ounces in 2013 and an additional 100,000 ounces annually in the “medium term,” the company said.
Amplats still intends to sell its Union mines “at the right time,” Griffith said.
Lonmin Plc, the world’s third-largest platinum producer, is “finely balanced” on the restructuring at Amplats as lower supply of the metal should support prices, acting CEO Simon Scott said in a Feb. 5 interview. Sue Vey, a spokeswoman for the company, declined to comment today.
Platinum companies will also face salary discussions with unions and the possibility of higher costs. The talks will be “one of the most difficult wage negotiations,” Griffith said.
The Association of Mineworkers and Construction Union, which represents 41 percent of the workforce at Amplats, is strongly opposed to the proposals, Treasurer Jimmy Gama said.
“Behind each of the 6,000 there are dependents; it’s unacceptable,” he said by mobile phone.
“There will be processes to be followed in terms of section 189 of the Labour Relations Act and we’ll engage the company along those lines. If we are unable to do that then we can seek a mandate from the workers on the next step.” he said.
Under the act, talks about potential job cuts are held with a facilitator appointed by the Commission for Conciliation, Mediation and Arbitration.
“We are highly disappointed by the company,” Lesiba Seshoka, a spokesman for the National Union of Mineworkers, which represents 35 percent of employees, said in a phone interview. The company should instead “hand over mining licenses” for public auction, he said after Amplats’ announcement. The union’s members may strike if there are any cuts, Seshoka said.
Zingaphi Jakuja, a spokeswoman for the Department of Mineral Resources, declined to comment immediately on the revised proposals.