07/05/2010 Mark Cutifani CEO of AngloGold Ashanti presenting their first quarter results at their offices in JHB. (176) Photo: Leon N icholas

Johannesburg - Anglo American will switch to mechanised open-pit mining from labour-intensive underground excavation as its local operations remain crippled by a three-month strike.

The company would make the transition in five to 10 years to improve productivity and safety, chief executive Mark Cutifani said at the annual general meeting in London on Thursday.

And the change would be carried out in a way that was “sensitive to its social ramifications”.

A third day of talks between producers and union officials ended on Thursday without a resolution or plans for further talks.

Output at unit Anglo American Platinum (Amplats) dropped 39 percent in the first quarter because of the walkout over pay, Anglo said.

The firm cut its forecast for full-year production by as much as 13 percent, with more possible cuts should the deadlock persist.

Cutifani “is bang on”, Paul Gait, an analyst at Sanford C Bernstein in London, said.

“The only way to get safe platinum is to get people out of the stope. Labour inflation in South Africa is running far faster than productivity gains in underground mines. That basically makes it a non-viable long-term option,” he said.

Stope is a practice used in mining in the form of steps from steeply inclined or vertical veins.

More than 70 000 members of the Association of Mineworkers and Construction Union have been on strike at the three biggest platinum producers since January. – Bloomberg