* World's biggest platinum producer bows to gov't, union
* Tensions high in platinum belt after violence last year
* Amplats needs cuts to restore profits
* Aims to cut production by 250,000 oz in 2013
By Helen Nyambura-Mwaura and Tiisetso Motsoeneng
RUSTENBURG, South Africa, May 10 Anglo American
Platinum said on Friday it would cut 6,000 South
African mining jobs, fewer than half the 14,000 initially
proposed, as it tries to restore profits without provoking a
backlash from the government and restive unions.
The world's top platinum producer, a unit of Anglo American
, added it would also keep open one of four shafts slated
for closure near the platinum belt city of Rustenburg.
Amplats aims to slash platinum production by 10 percent or
250,000 ounces this year, equal to 4.5 percent of global output.
Another 100,000 ounces will go in the medium term.
Under an original plan announced in January, it aimed to cut
output by 400,000 ounces. The reduced job losses are likely to
soften the blow for the African National Congress (ANC)
government, which faces an election next year, but it remains to
be seen if it appeases the anger of powerful local unions.
"Everyone is surprised. We were not expecting any
retrenchment at all. We can't allow this," Sphamandla Makhanya,
a worker committee member at Amplats in Rustenburg told Reuters.
"But before we do anything, we are going to have a mass meeting
with the workers to decide what to do next."
For Amplats, reining in costs and cutting output to underpin
the price of platinum, used for emissions-capping catalytic
converters in vehicles, is crucial to getting back to profit.
The company said it would now aim to produce 2.2 to 2.4
million ounces a year, up from the 2.1 to 2.3 million ounces
targeted in the original plan. The revisions should deliver 3.8
billion rand ($423 million) in savings by 2015.
"This is a significant step back to where we were and it
doesn't feel like it addresses the radical problem of oversupply
of material, weak or deteriorating demand environment," said
analyst Paul Gait of Sanford Bernstein in London.
"The positive is this is an undoubted improvement from the
kind of announcement we used to have from Anglo Platinum, which
was a blithe disregard for market fundamentals, the cost base of
their production - and a single minded focus on producing."
Amplats' shares extended losses on the day to be almost 3
percent lower in mid-afternoon trade in Johannesburg.
Sources told Reuters last week the plan would be watered
down after talks with the government.
Chief Executive Chris Griffith said the company would
discuss it with unions over the next two to three months.
He signalled the jobs target could be reached over time,
saying on a call with analysts the company would look at
reducing numbers by as much as 3,000 to 4,000 a year through
attrition and would consider proposing early retirement for
1,500 employees over the age of 55.
Some older workers around Rustenburg on Friday said they
were ready to hang up their tools.
Dressed in white overalls, Karel Mokgoatsi, a rock driller
at Khomanani, one of the affected mines, said: "For others this
will be bad news but for me it is good news. I am 60 years old
and I am ready to go and have some rest."
VOW TO FIGHT
Hours before the announcement, activists from the militant
Association of Mineworkers and Construction Union (AMCU) in
Rustenburg said they would not tolerate any job losses.
"Where will 6,000 people in this economy go? They will
engage in criminality," said Simon Hlongwane, an AMCU branch
secretary at Amplats. "We as AMCU stand ready to fight."
Social tensions are running high after violence rooted in a
labour turf war between AMCU and the dominant National Union of
Mineworkers (NUM) killed more than 50 people last year and
provoked illegal strikes that hit production.
The unrest was a major reason why Amplats suffered its first
loss last year. But with unemployment at more than 25 percent,
the government has taken a strong line with Amplats.
The average South African mineworker has eight dependants,
so the social and political consequences even of reduced
lay-offs will be far reaching.
AMCU miners briefly closed several mines when the initial
Amplats plan was unveiled in January. Its leaders said on
Thursday they would not back such wildcat strike action.
AMCU emerged as the dominant union in the platinum shafts
after it poached tens of thousands of disgruntled members from
NUM, a political ally of the ruling African National Congress.
The union power struggle explains why the ANC and the
government have dug in on the proposed Amplats cuts, a striking
contrast to the past when the gold industry was allowed to cut
tens of thousands of jobs to remain viable.
General elections are due next year, and for the ANC, the
union war means it has lost tens of thousands of potential
voters and their many dependants as the NUM is a vehicle for
campaigning and getting out the working class vote.