Amplats Better Off Keeping Job Cuts Amid Strike, Coronation Says
Anglo American Platinum Ltd. (AMS), the largest producer of the metal, will do better to see out the strike at its South African mines than by giving in on planned job cuts, said Coronation Asset Management Ltd.
Mines run by the Johannesburg-based company known as Amplats have been halted since Sept. 27 because of a strike called by the Association of Mineworkers and Construction Union over proposals to cut 3,300 jobs.
The union, the largest at Amplats, is challenging a decision by the company to consolidate five mines into three at its Rustenburg complex. The sites are losing more than 1 billion rand ($99 million) every six months, Chief Executive Officer Chris Griffith said Aug. 30. Plans to cut as many as 14,000 jobs, announced in January, were scaled back following pressure by unions and the government.
“It is better in the long-term interest of the business to take a strike to establish a realistic wage base and to put the company in a profitable position,” Neill Young, an analyst at Cape Town-based Coronation, said by phone yesterday.
The strike is continuing and Amplats remains in talks with the AMCU union,Mpumi Sithole, a company spokeswoman, said in e-mailed comments yesterday. A spokesman for the AMCU wasn’t available to comment when reached by phone.
Amplats has no choice other than to implement the job cuts, according to RBC Capital Markets LLC analyst Des Kilalea.
“This is a business that in its current structure doesn’t work,” Kilalea said by phone from London. “They’re going to lose money either way.”
The Johannesburg Labour Court yesterday reserved judgment in a case brought by the National Union of Mineworkers in a separate bid to halt the job cuts, union spokesman Lesiba Seshoka said by phone. The NUM was unseated by the AMCU as Amplats’s biggest recognized union in March.
Less than 20 percent of workers reported for duty at the company’s operations in South Africa’s North West province on the first day of the strike, the company said in a Sept. 27 statement. Operations at its processing division were not interrupted, it company said.
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