Fears for jobs as Amplats eyes mine salesComment on this story
Johannesburg - Anglo American Platinum (Amplats) plans to dispose of its loss-making Union mine and Rustenburg operations as well as its Pandora joint venture, and will consider whether to disinvest from its Bokoni mine, leading to concerns among unions that 20 000 mineworkers will be left jobless.
The Amplats share price rose 4.69 percent on the JSE to close at R478.74 yesterday as investors were positive about the news that Amplats would disinvest in the assets through a sale or a public market exit, and analysts said the announcement was encouraging.
Amplats will now focus on delivering value from its Mogalakwena, Unki, Twickenham, Amandelbult and joint venture mines through a strategy that includes mechanisation. The joint ventures include Mototolo, Modikwa, Kroondal and Bafokeng Rasimone Platinum Mine.
The Rustenburg and Union mines contribute a quarter of Amplats’s production of 2 million ounces a year and are among the country’s oldest platinum operations.
The mines employ a total of about 50 000 miners and there may be just 30 000 jobs left when the dust settles.
Amplats plans to retain in its portfolio the smelting and refining operations at Rustenburg and Union.
“The intention to exit Union mine and concentrators has already been announced, and it has now been concluded that Rustenburg and our Pandora joint venture asset will be better placed in the hands of new owners who would be able to provide the focus and capital for the operations to have a successful future,” Amplats chief executive Chris Griffith said.
The National Union of Mineworkers (NUM) said it was seriously concerned and shocked at Amplats’s decision to sell its oldest South African platinum mines.
The move would leave 20 000 mineworkers jobless, Frans Baleni, the NUM’s general secretary, said.
“Any sale is going to result in job losses and this is punishment for poor workers.
“We continue to make that appeal for workers to reject divisions and stay united to defend jobs… The victims are going to be workers while the sellers will be richer and workers will be poorer and unemployed,” Baleni said.
The biggest platinum producer in the world was hit hard by the five-month wage strike led by the Association of Mineworkers and Construction Union (Amcu).
Griffith dismissed reports that the disinvestment was linked to the strike. He said it was a part of the “repositioning” of the company following the restructuring announced early last year.
Amplats would continue its growth plan for the rest of its local assets over the next 10 years. Between R70 billion and R100bn would be invested in South Africa, Griffith said.
The company preferred to sell the assets but would list them if a suitable buyer was not found, he said.
“We have engaged with the government and now we will talk to our employees.
“We are not shutting the mines down, but they will have different owners. There are a number of companies who want to get into the platinum industry,” Griffith said.
Sharief Pansarey, a mining analyst with Old Mutual Investment Group, said the disinvestment was the reason for the rise of the share price.
“Overall, we view this decision as encouraging. These are deep, high-cost and labour-intensive mines which reap very little return,” he said.
“This decision should not be a surprise, given the Anglo American strategy to achieve a 15 percent return on capital as well as to move away from labour-intensive mining.”
The strike took its toll on Amplats’s performance, with the board deciding to suspend the dividend for the six months to June. Net debt increased to R12.4bn in the period. About R4.1bn was incurred in fixed costs at the strike-hit mines.
Amplats posted an interim operating profit of R353 million compared with R2.67bn a year ago. Headline earnings a share declined 88 percent to 60c from R5.14 a year ago.
Dick Forslund, an economist and researcher at the Alternative Information and Development Centre, which advised Amcu during the wage negotiations, said: “We say good riddance.
“This is one of the Anglo American subsidiaries that have caused a lot of damage to the South African economy.
“Anglo remains responsible for prolonging the strike and creating labour instability because of its strategy for a 15 percent return on capital.”