Amplats Seen by Investec as Unable to Win Costs Battle

The compromise Anglo American Platinum Ltd. made on job cuts with the largest union at its mines shows outside pressures prevent the metal’s biggest producer from trimming costs to help profit, Investec Ltd. said.

Workers returned to the company’s mines in South Africa today after it agreed with the Association of Mineworkers and Construction Union to halt the forced job losses for about 3,100 employees, ending a two-week strike.

The company known as Amplats proposed in January to cut as many as 14,000 positions as it recorded a loss for 2012 amid rising costs and lower platinum prices. The number of affected jobs was reduced to 6,000 in May following objections from the government and lowered further to about 4,000 in August.

Amplats “has had to back down due to demands from the unions,” Investec said today in a note to clients. The company “has therefore demonstrated to shareholders that it is unable to make the changes that are needed to strengthen its business,” and its problem “runs much deeper than” the 40,000 ounces of platinum it lost because of the strike, it said.

The accord with the AMCU came after the company agreed to redeploy affected miners into positions now held by contractors and to offer more voluntary separation packages, Johannesburg-based Amplats said in a statement yesterday.

The company would retain a further 1,250 workers for six months to undertake mine reclamation work, which includes the removal of underground equipment at shafts that it plans to close, it said.

“They just couldn’t do what they initially set out to do,” Albert Minassian, an analyst at Investec, said by phone from Cape Town. “By the time they pleased everyone there was little left.”

The agreement ended a work stoppage that started on Sept. 27 and cost the company almost 1 billion rand ($101 million), Chief Executive Officer Chris Griffith said on Johannesburg-based SAfm radio today. Anglo American Plc, which owns 77 percent of Amplats, will close or sell more of the platinum company’s mines if profit doesn’t improve next year, CEO Mark Cutifani said Aug. 29.

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