January 29, 2013 / 12:15 PM / 5 years ago

UPDATE 3-S. Africa's Amplats delays job cuts for more govt talks

* Company agreed to postpone job cuts consultation

* Up to 14,000 layoffs still an option

* Unemployment a pressing issue for ANC-led government

By Olivia Kumwenda

JOHANNESBURG, Jan 29 (Reuters) - Anglo American Platinum Ltd has briefly delayed a restructuring that puts up to 14,000 jobs at risk to allow more time for talks with the government and unions.

The world’s largest platinum producer, known as Amplats, agreed late on Monday to defer by two weeks a consultation on its planned layoffs which could amount to around 3 percent of the country’s mining labour force.

Amplats wants to mothball loss-making mines as part of a turnaround plan that has drawn criticism from the African National Congress (ANC)-led government, under pressure to tackle high unemployment ahead of general elections next year.

A new cellphone video of the police shooting of 34 striking miners in South Africa in August emerged on Monday, another political flashpoint and a grim reminder of the mining violence that killed over 50 people last year.

Amplats Chief Executive Chris Griffith told Talk Radio 702 on Tuesday that talks with the government had been “constructive.”

“What we agreed on is we would delay the consultation process,” he said.

The legally required consultation will now start on Jan. 30 instead of Jan. 15 and last for 60 days.

South Africa boasts 80 percent of the world’s platinum deposits but producers have been hit by rising input costs, falling prices, safety stoppages and violent labour unrest.

Amplats’ delay to consulting on the layoffs may give the company more time to sell its revival plan to the government or find alternatives, although analysts say other options would be limited.

“I don’t actually know what they have achieved by all of this and I would be very surprised if anything changes,” said Justin Froneman, platinum analyst at SBG Securities in Johannesburg.

Amplats, which expects to post a loss for the 2012 financial year, says its outlined closure of two mines around the restive platinum belt city of Rustenburg is vital to restoring profitability.

“This is not about playing games. The company is in real trouble,” Griffith told the radio station.

Parent Anglo American, which on Tuesday announced a $4 billion writedown to its Minas-Rio iron ore project in Brazil, is under pressure to shore up margins and shareholders will want at least part of the Amplats’ plan to go ahead.

Froneman said SBG Securities estimates the two mines to be put on “care and maintenance” - which means an indefinite stoppage of production - between them had a gross loss of about 230 million rand ($25.58 million) last year.


Mining minister Susan Shabangu said Amplats had betrayed government trust earlier this month by announcing the plan to mothball shafts and lay off workers.

The African National Congress has been losing support in the mines as the ANC-linked National Union of Mineworkers (NUM) bleeds members in a turf war to the far more militant Association of Mineworkers and Construction Union (AMCU).

Rank-and-file perceptions of both the ANC and the NUM are that both have lost touch with the concerns of poor workers, in a country where unemployment officially runs at around 25 percent but most economists believe it exceeds 40 percent.

AMCU activists have vowed to shut all of Amplats’ operations if the job cuts go ahead.

In a separate development, South Africa’s third-largest gold producer Harmony Gold said on Tuesday it had made progress in talks with unions to reopen its Kusasalethu mine that did not restart after the Christmas holidays, threatening almost 6,000 jobs.

“We have made some progress today and we are one step closer to finding a sustainable solution. However, the mine remains closed until an agreement has been reached,” Harmony Chief Executive Graham Briggs said in a statement.

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