The chief executive at Anglo American, Mark Cutifani, has upped the ante in the showdown between the government and the mining sector over job cuts amid rising costs and falling commodity prices.
Speaking in Johannesburg this week, Cutifani said that the government had no leg to stand on when it came to criticising the private sector when state-owned enterprises (SOEs) were on their knees.
The mining industry is shedding thousands jobs with Anglo having announced that it would cut a third of its workforce to 98 000 by 2018 as it divested in 15 assets.
Lonmin, the world’s third-biggest platinum producer, plans to cut 6 000 jobs as declining prices in an oversupplied market hits its bottom line.
Cutifani said state-owned companies formed a part of the backbone of the country’s industrial infrastructure and must be prioritised.
“In our system, a government that supports uncompetitive SOEs cannot criticise private enterprise for taking the necessary action to survive in these tough times,” he said.
Survival mode
Cutifani said that given that more than 90 percent of SOEs were loss-making, the country must begin to reflect on the underlying causes.
“Given the tough conditions our SOEs are experiencing, why would we be surprised to hear our private companies complaining that business in South Africa is tough?” Cutifani asked.
Cutifani said that tough decisions had to be made to survive in a competitive world.
In terms of SOEs, the government was in denial, he said.
Power utility Eskom is battling to save the grid from collapse, and has indicated that load shedding cost the fiscus between R20 billion and R80bn a month. PetroSA is expected to incur a loss of R15bn in the current financial year.
The Passenger Rail Agency of SA has sacked Lucky Montana from the position of chief executive, while board chairman Popo Molefe has claimed to have received death threats.
Investment Solutions economist Chris Hart was quoted as saying that SOEs were being run as political enterprises with no guarantee for a return.
Earlier this week, the ANC called on mining companies to review their plan to cut thousands of jobs as it would worsen the struggling economy.
Less competitive
ANC secretary-general Gwede Mantashe is reported to have said: “Those companies that are set to retrench, such as Lonmin, are called upon to review their decisions, their plan will deepen the crisis in our economy.”
This came as the local mining industry fell outside of the top 50 mining jurisdictions and was languishing at number 56 in the World Economic Forum’s global competitiveness index, having slipped three places last year, Cutifani said.
He said that if mining in South Africa had come to the party with a growth rate matching the rest of the economy over the past 20 years, “we would have seen an annual average growth over that period rising from 3.2 percent to about 4 percent – a significant 25 percent uplift”.
“And there could have been some 20 percent more jobs – equivalent to 260 000 direct and indirect positions,” he added.