Johannesburg - Mining majors announced plans to lay off more than 14 000 people last week, the latest indication of the state of chaos in the industry as it grapples with the effects of rapidly falling commodity prices.
The job cuts come as the mining industry’s fortunes have fallen following continuing losses, a reflection of the current commodity price environment. Resource stocks fell the most on Friday, as confidence in the market slid.
Global diversified producer, Anglo American, announced on Friday that it would shed 6 000 jobs in a restructuring process that would see a 35 percent reduction in its workforce as it divested non-core assets.
Job cuts
Earlier on Friday, Lonmin said it planned to cut 6 000 jobs as part of a plan to close its high cost shafts and reduce output.
Lonmin, which employs a 38 000 strong workforce, said it was closing its Hossy and Newman shafts to reduce high costs in an oversupplied market, which had seen platinum prices fall to a six year-low.
Lonmin said it would also place its Generation 1 shafts, including W1, E1 and 1B shafts, on care and maintenance.
Anglo American Platinum (Amplats) is cutting 420 managerial and supervisor posts. Amplats, which accounts for 38 percent of global supply, in 2012 said it would cut 14 000 jobs, but changed its tune after a government backlash.
Chris Hart, the chief strategist of Investment Solutions, on Friday forecast further job cuts. “Further substantial job losses are in the retrenchment pipeline across the mining and resources sector. This is driven by rising costs and falling commodity prices. The mining recession is feeding back into the manufacturing sector.”
Kumba Iron Ore said on Thursday that it had scaled back on 1 772 jobs as the iron ore price had fallen to its lowest level since the financial crisis. It said last week that it had cut 31 percent of its staff at its Kolomela and Sishen mines in Northern Cape.
It cut 351 jobs at its head office and is also closing its Thabazimbi Mine in Limpopo.
ArcelorMittal South Africa (Amsa) said on Thursday that it would be putting its Vereeniging long steel works on “emergency care” until the end of next month due to challenges in the steel industry.
The company said 1 200 employees would be affected.
Amsa rival, Evraz Highveld Steel and Vanadium, which is in business rescue, said last week that it planned to halve its 2 000 workforce due to cheap steel imports mainly from China.
Dennis Dykes, Nedbank’s chief economist, said mine employees would bear the brunt of the restructuring, and the knock-on effects would be far reaching.
He added that the severity depended on how long the slump in commodity prices lasted. “The big question is whether this is a cyclical slump or a secular decline in commodity prices.”
The Association of Mineworkers and Construction Union (Amcu), which led the crippling five-month platinum belt strike last year, was silent on Friday about the job cuts.
Unions weigh in
Its arch-rival, the National Union of Mineworkers (NUM), said it would fight against the “fashionable” job losses in the industry.
Trade union Solidarity said it would work to ensure the impact of the retrenchments was softened for its members.
Livhuwani Mammburu, the acting NUM national spokesman, said this was a bloodbath of job losses in the mining industry. “It is a tragedy for the mineworkers in South Africa. As the NUM, we are going to fight against any job losses. It is very painful to see that these mining companies take the decisions of cutting jobs easy.”
Gideon du Plessis, the general secretary of Solidarity, urged trade unions, who loudly boast their militant and revolutionary ideologies, to learn from this disastrous situation. “This planned retrenchment process once again proves that strikes can rob innocent employees of their jobs,” he said.
Mahlodi Muofhe, the special advisor to Resources Minister Ngoako Ramatlhodi, said the minister was concerned about the shedding of jobs. “The minister is concerned about the high pace of job losses in the industry.”
He added that companies needed to follow the law before shedding jobs, including notifying the department, in order for it to interrogate the circumstances of the jobs cuts.
Business Report