South Africa Risks Losing 145,500 Mine Jobs by 2015, Nomura Says

Platinum companies in South Africa, which has the world’s largest known reserves of the metal, are at risk of losing 145,500 jobs this year and next as more mines operate at a loss, Nomura International Plc said.

Producers are struggling with higher costs as demand wanes, prompting companies including Anglo American Platinum Ltd., the world’s largest miner of the metal that’s known as Amplats, to consider cutting back operations. Impala Platinum Holdings Ltd. on May 2 said more of its shafts are producing at a loss and it’s assessing the operations to determine their viability. Platinum for immediate delivery has fallen 7 percent this year to $1,430.93 an ounce by 1:47 p.m. in London.

“If we assume a $1,500-ounce price and look at the breakeven platinum price for operations, then there are around 24,000 jobs at risk next year,” Peter Attard Montalto, a London-based strategist with Nomura, wrote in an e-mailed report today. This “rises to 121,500 in 2015. We can therefore see that the necessity and effects of restructuring will spread widely beyond Amplats.”

Platinum-group metals companies employed 195,000 people in 2011, according to Department of Mineral Resources data on the Chamber of Mines’ website. At Impala, average costs increased 23 percent to 15,957 rand ($1,590) an ounce for the nine months through March from a year earlier, it said on May 2. Amplats’ cash operating costs surged 21 percent to 16,364 rand per equivalent refined platinum ounce in the year through December, it said on Feb. 4. The company in January considered 14,000 job cuts and reduced the figure to 6,000 after the government threatened to revoke its mining licenses.

Labor Issues

Violent strikes over pay and labor-union representation in South Africa’s platinum belt in the North West province began in the first quarter of last year at Impala’s Rustenburg operation, the world’s biggest mine for the metal. They culminated in a face-off that ended in the deaths of at least 44 people, including 34 protesters shot by police in a single day, near Lonmin Plc’s Marikana mine in August last year. This year, three Lonmin workers have been killed amid union rivalry.

The clampdown on job cuts is “simply a pressure cooker, reinforcing increasing losses on mines,” Attard Montalto said. “We assume job losses will occur in the end anyway. Put simply, we do not believe that platinum mines will produce at a loss for more than two years.”

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