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UPDATE 2-Amplats says S.Africa labour unrest hurting investment
February 20, 2013 / 12:45 PM / 5 years ago

UPDATE 2-Amplats says S.Africa labour unrest hurting investment

By Wendell Roelf

CAPE TOWN, Feb 20 (Reuters) - Anglo American Platinum (Amplats) said persistent labour unrest is jeopardising investment in South Africa and warned that talks with government and unions may not lead to a reduction in its planned job cuts.

Workers at the world’s largest platinum producer, which reported its first full-year loss this month, returned to work on Wednesday after a one-day walk-out the previous day following violence at one of its mines.

“If we keep having all these difficulties and we keep sending these difficult messages from South Africa ... we are going to find it very difficult to ask for that money that we want to put in to maintaining our presence in South Africa,” Chief Executive Chris Griffith told a parliamentary committee.

The company, majority owned by Anglo American, has invested 9 billion rand ($1 billion) a year in South Africa on average over the past decade, but has seen its profits eroded by labour unrest, stagnant global demand and weaker prices.

Tuesday’s walk-out added to tension at Amplats, which was looking to shed about 14,000 jobs or almost a quarter of its including contractors, and 3 percent of South Africa’s mine labour force, after a year of labour strife cut into its production and revenue.

According to the Chamber of Mines, a South African industry body, 59 percent of the sector’s platinum mines were in a marginal or loss-making position in 2012.

“It is many of the companies that are in the same boat facing a set of these costing and pricing challenges which place them into unviable territory,” Baxter told the committee.

Wage negotiations in the mining sector scheduled for 2013 were likely to complicate restructuring plans, he added.

Amplats was engaged in talks with government and labour unions on its planned job cuts but Griffith said he was “not confident” that the negotiations would prevent the job losses.

“You asked a question: ‘Am I confident that these processes will save all these jobs? I am not confident at all chairman, I must be honest,” Griffith said.

Amplats announced plans in January to mothball two South African mines, sell another and cut jobs as part of a restructuring of its operations to increase profitability.

The plans were condemned by government, while unions said they risked leading to further violent labour strife.

More than 50 people were killed in labour unrest last year, including 34 shot by police at Lonmin’s Marikana mine in August, the deadliest single security incident in South Africa since apartheid ended in 1994.

The ruling African National Congress has tried to reassure investors the unrest is not hurting the country, which had its sovereign credit rating downgraded by Fitch last month due in part to the labour problems.

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