Yesterday’s decision by Anglo American Platinum (Amplats) to delay the implementation of its restructuring plan, which involves cutting up to 14 000 jobs in the next two months, is expected to do the firm more harm than good, according to some analysts.
Amplats, a subsidiary of Anglo American, stalled its plan following a damage control meeting with union and government representatives.
In a joint statement by Amplats, unions and the government, it was announced that the company would:
n Postpone the continuation of the section 189 process under the Labour Relations Act, which began on January 15, in order to allow for a detailed consultation process between the Department of Mineral Resources, Amplats and organised labour; and
n Expedite the consultation process, which would take no more than 60 days starting from January 30.
“The tripartite members recommitted to engage constructively for the benefit of all stakeholders and will communicate progress updates as and when appropriate,” the statement read.
On January 15, Amplats announced plans to mothball four shafts at its Rustenburg operations that were not currently viable, and to reduce output by about 400 000 ounces a year to between 2.1 million and 2.3 million ounces.
It said it expected about 14 000 jobs to be lost, including 13 000 from Rustenburg.
“The delay will put the company’s further financial viability at risk. That would be the worst outcome for all parties,” Loane Sharp, a labour analyst at Adcorp, said yesterday.
Delaying the implementation of the proposed restructuring plan was too late to help the rand, which had already been harmed following public statements by Mineral Resources Minister Susan Shabangu.
An upset Shabangu previously said the company had failed to consult with the government and she threatened to review its mining licences.
Retrenchments were often a sign of bad management, said Peter Major, a mining analyst with Cadiz Corporate Solutions.
“Laying people off may be seen as a cry for help. Take Harmony Gold for example. They spent money investing in the Kusasalethu mine, and they have to close it because of the strike,” he said.
Major said the delay would raise doubts about Amplats’s credibility, because it spent a year conducting a financial review of its operations.
He added that the company should have consulted unions and the government behind closed doors before announcing its plan to restructure.
Amplats, like its counterparts in the platinum sector, is taking financial strain following a slump in demand for the white metal. The challenging market environment was exacerbated by a two-month wildcat strike across the industry.
More mining companies are expected to announce restructuring of their businesses following the strike.
Earlier this month, Harmony Gold announced the possible retrenchment of 6 000 workers as part of a proposed plan to shut Kusasalethu, near Carletonville, following an unprotected strike.
Amplats gained 0.21 percent to close at R439.94 on the JSE yesterday and the platinum index was up 0.04 percent. Anglo added 0.33 percent to R267.27.