Jobs disaster looms in SA

File photo: Denis Farrell

File photo: Denis Farrell

Published Jul 28, 2015

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Johannesburg - South Africa is heading for a deeper jobs crisis, and unemployment is set to rise to new levels, as companies in the mining and steel industries shed jobs by the thousands and some shut their doors altogether.

The mass retrenchments will push tens of thousands of workers who are already living on the edge of poverty into a pool of over 30 percent unemployed South Africans.

Several precious metals and steel companies have served workers with Section 189 notices in past weeks, shedding more than 5 000 jobs collectively.

Unions in the mining industry are still reeling from job cuts at Kumba Iron Ore, Glencore and others.

Glencore also announced it would cut 600 jobs at its Optimum Coal Mines subsidiary.

Platinum producer Lonmin announced on Friday that it was closing some of its shafts at its Rustenburg operations, putting a total of 6 000 jobs at risk.

Chief executive Ben Magara said the closures, which he described as “swift, decisive, even though difficult measures”, were Lonmin’s response to the “platinum pricing crisis”.

Unions and Mineral Resources Minister Ngoako Ramathlodi have called on mining companies to ensure that retrenchments are a last resort.

And on Monday, following a lekgotla over the weekend, the ANC also expressed its alarm over job losses across the economy.

“South Africa remains a mineral-driven economy, based on, among others, industrialisation through beneficiation and foreign earnings.

“(The) lekgotla noted the decline in commodity prices across the sector. While we appreciate that the price of minerals is inherently cyclical, we also noted that the decline of the demand for steel in the Chinese market and the dumping of cheap steel in South Africa, is impacting negatively on our economy,” it said.

ANC secretary-general Gwede Mantashe said: “The (lekgotla), however, called for caution in the manner in which mining companies react to these challenges. It is of concern that their response has been the cutting of jobs; which, instead of resolving the challenges, is deepening the crisis. Those companies that have already announced possible retrenchments are called on to review their plans and avoid massive job losses as such would lead us further into crisis.”

The relationship between the government and the private sector was that of a love-hate relationship, he said. “The relationship is one of unity and struggle, we sometimes hate and love each other… and we must, because we need each other. This is why we make a call to the companies because we cannot issue a decree to the companies.”

Asked what the government would do if the companies did not comply with the ANC’s call, Mantashe said the ruling party was set to meet the companies’ management to “show them our views”.

While the National Union of Mineworkers has called for a moratorium on all retrenchments in mining, the companies argue their decisions are based on a variety of factors beyond their control.

The Chamber of Mines blames the job cuts on “ageing and deepening mines and infrastructure, rising costs and a decreasing dollar gold price (currently at its lowest point in five years) and labour costs which make up around 50 percent of operating costs”.

It said that since last year 13 000 jobs were lost in the gold sector. Unions expect these numbers to climb higher this year if nothing drastic is done.

Producers in the sector have warned that if current negative trends continue, the situation would be bleak 10 years from now.

“By 2025, South African gold production will reduce to 69 tons, or a halving from current levels.

“This could potentially result in employment decreasing by 43 percent to 68 000 employees over the next decade,” reads a fact sheet on the sector.

The DA called on the government to act urgently before the situation in the mining industry deteriorates even further. “It is no longer good enough for the government to simply blame the difficulties in mining on prevailing conditions in the world economy. It has to take positive steps to solve issues that are making mining in South Africa more difficult and less affordable,” said the party’s mineral resources spokesman James Lorimer.

The National Union of Metalworkers of SA has also made similar complaints about the government’s role. It and trade union Solidarity have warned that the steel industry is currently under immense pressure due to the weakening of the steel price, as well as the increase in electricity tariffs and the high occurrence of load shedding.

The Steel and Engineering Industries Federation of Southern Africa said 16 000 jobs were lost between the fourth quarters of 2013 and last year. The job losses and the country’s economy will be discussed at a cabinet lekgotla this week.

Pretoria News

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