CAPE TOWN (Reuters) - Threats by South African politicians to review mining licenses are “out of order”, the incoming head of mining group Anglo American said on Thursday, after its plans to cut jobs triggered a fierce response from the government.
Anglo’s struggling platinum business wants to cut 14,000 job cuts as it mothballs two mines and sells another, part of a plan it hopes will restore it to profit amid rising costs, weak demand and workforce unrest.
The planned lay-offs at Anglo American Platinum come as South Africa’s government struggles with a jobless rate that official figures put near 25 percent, but which many believe to be higher.
The ruling African National Congress said the overhaul justified a review of mining licenses and President Jacob Zuma said this week that threatening mine closures was almost “blackmail.”
Mark Cutifani, who is due to move to Anglo American in April from his current role as Chief Executive of AngloGold Ashanti, said industry and government should be careful of the words they use as people can interpret them the wrong way.
“Threats to licenses are out of order,” Cutifani told a mining conference in Cape Town. “I hope after the hue and cry from investors all around the world ... we’ve all learned the lesson that we shouldn’t be threatening licenses when a company is looking at preserving its life.”
“At the moment the industry and the government is shouting at each other from our respective corners,” he said.
The ANC wants to avoid job losses ahead of a general election next year, but thousands of miners could be laid off as their employers grapple with soaring costs and poor productivity.
Amplats, as Anglo’s platinum arm is commonly known, swung to its first annual loss in 2012 and the parent company has said both the industry and its own unit - the world’s top producer of the white metal - are in an unsustainable position.
Anglo’s outgoing CEO Cynthia Carroll said this week the company would press ahead with the restructuring despite the objections from the ruling party, government and unions.
Cutifani, an Australian, was appointed to the top job at Anglo in large part because of his good relations with government. He is head of South Africa’s chamber of mines, a position he will retain in his new role.
He played up the growth potential of South Africa’s mining sector, but said it had underperformed the Johannesburg stock exchange by 60 percent over the last six years.
Increased political and social risks had been a significant factor, including violent labor strikes last year.
“In South Africa, we don’t talk about productivity,” Cutifani said. “It may not be the most important issue today, but in 10 or 15 years it is the most important. It is the only thing that will lift South Africa out of poverty.”
Editing by James Jukwey and Tom Pfeiffer