JOHANNESBURG - South African miner Impala Platinum’s plans to slash more than 10,000 jobs has raised temperatures in an industry where companies are already at odds with workers over safety and wages.
Mining firms are also locked in a stand-off with the government over a mining charter they say will hurt viability and deter investment, ultimately putting more jobs at risk, if implemented in its current form.
Impala Platinum announced last week it would cut 13,000 jobs over two years, saying a strategic review of its Rustenburg operation showed that optimisation measures in the prevailing low platinum price environment were not sufficient to secure its economic viability.
Implats said it was slashing the number of its mines from eleven to six and cutting its future production to 520,000 ounces of platinum and would reduce the head count from around 40,000 to 27,000.
The news came just two days after the statistics agency said South Africa's unemployment rate increased by 0.5 percentage points to 27.2 percent of the labour force in the second quarter.
The looming job cuts add to an already fractious relationship with mineworkers who are demanding above-inflation wage increases from companies they say have failed to fairly pass on profits to workers. Unions are also angry over deaths at South African mines, with nearly 50 lives lost so far this year.
The National Union of Mineworkers (NUM) said retrenchments had become an excuse for mining companies it accused of being insensitive to the plight of workers and their families, especially with the high unemployment rate in the country.
Fellow union Solidarity also denounced Impala’s plans as part of a “new normal” in which “mining houses use retrenchments as only generally accepted recourse during unfavourable market conditions”.
But Solidarity deputy general secretary for the mining industry Connie Prinsloo did not absolve the government of blame, accusing it of hostility towards the sector.
“In addition to the decline in economic growth, government’s hostility towards the mining industry combined with political and economic instability have given rise to the fact that mining houses are addressing their risks immediately, using retrenchments as a short-term solution,” Prinsloo said.
“This is a battle between the mining houses, government and the global economy, and unfortunately, employees are often caught in the crossfire. They are now hardest hit by the consequences of the war between those three parties.”
Relations between mining companies and President Cyril Ramaphosa’s government have been strained over a contentious mining charter meant to ensure a more racially equitable representation in an industry still dominated by whites.
The Minerals Council of South Africa, which represents mines, says while it supports a 30 percent black ownership target on new mining rights, with shares allocated for communities, organised labour and black entrepreneurs, some elements of the new draft will not promote competitiveness.
The International Monetary Fund has noted that despite its potential, South Africa ranks low on investor perceptions in mining.
In a statement after recent annual bilateral discussions with the government, the Fund said last year's adoption of a mining charter without adequate consultation had exacerbated policy uncertainty and further complicated investment prospects.
“(IMF) staff recommended a consensual revision of the charter, involving all stakeholders, as a crucial step to turn around mining activity—and with it spur exports and job creation, and benefit sectors with linkages to mining,” it said.
The IMF also urged the authorities to expedite action to remove uncertainty about property rights and tenure security, after Ramaphosa rattled investors by announcing that the governing ANC party would press on with amending the Constitution to allow for land expropriation without compensation.
“In a way, this debate is undermining the credibility of the government’s stated priorities to attract investment,” the IMF said.
“ In line with best international experience, land reform should focus on enhancing agricultural productivity, improving land administration to strengthen security of tenure, and reducing poverty."
Adding to the pressure on the mining sector, ongoing wage negotions between unions and gold producers have turned confrontational, with the NUM last week "declaring a war" against companies it accused of being "arrogant and negotiating in bad faith".
Chief Negotiator for the producers Motsamai Motlhamme however argued the increases of up to 7.2 percent offered by companies were credible in the face of current precarious position of the industry as a result of a stagnant gold price, rising costs and falling profitability.
"Only by ensuring the sustainability of the industry will mines remain viable and able to sustain jobs," Motlhamme said.
- African News Agency (ANA)