AFTER delaying management salary increases and cutting capital spend, Impala Platinum (Implats), which completed the acquisition of Royal Bafokeng Platinum three months ago, has initiated a voluntary retrenchment exercise at its head office and Rustenburg operations on a one-month’s notice and two weeks’ pay for every year of service completed.
Another big platinum miner, Sibanye-Stillwater, said last month that a restructuring of its platinum group metals (PGM) operations in South Africa could result in the retrenchment of more than 4000 workers.
Implats recently said that it was cutting capital expenditure for some of its projects, including its Zimplats operation in Zimbabwe, as the commodity downturn ate into profitability of miners of the precious metal. Now, the South African PGM miner has initiated a mutual retrenchment exercise.
Moses Motlhageng, the CEO for Implats’ Rustenburg operations, said in a November 3 letter to employees that “the situation (declining PGM prices and inflation pressures) requires us to make some workforce” adjustments. Pursuant to this, Implats was now “opening an application for Mutual Separation Packages” to employees.
Johan Theron, a spokesperson for Implats, confirmed to Business Report on Saturday that the company’s mutual retrenchment exercise was being implemented at the company’s head office and Rustenburg operations.
“At this time we have initiated at the corporate head office and recently Impala Rustenburg,” he said by email.
He, however, would not say how many employees would be affected by this, saying this was dependent “on how many people elect to accept and exit in this way” from the company.
Implats said in its November 3 letter to employees that the voluntary separation exercise was being implemented despite “cost containment and cash preservation measures that have been implemented across the operations” to mitigate the impact of falling PGM prices.
Last month, Implats, which last year announced plans to invest R50 billion into a five-year capital investment programme across its mining and processing assets, has said that it is delaying some capital projects.
Employees opting to undertake the voluntary retrenchment will be accorded “two week’s pay for every completed year of service, one month notice pay, good leaver benefits” and payment of any study loans.
“The introduction of this MSP (mutual separation package) is a response to the broader economic challenges facing the company and the PGM industry as a whole. We are hopeful the challenging operating environment will improve over the short to medium term… failing to act quickly may have dire consequences for the company and make recovery more difficult,” Motlhageng explained in the letter to employees.
The voluntary retrenchment exercise by Implats comes about three months after the acquisition of a controlling interest in Royal Bafokeng Platinum.
The company was now set to address the “fundamental technical weaknesses at both the processing plant, and particularly the new plant, Maseve, which never got going,” according to CEO, Nico Muller.
However, it is the voluntary retrenchment initiated at Rustenburg and at its head office that has ruffled labour unions.
Phuthuma Manyathi, a regional secretary for labour union, Association of Mineworkers and Construction Union, told Business Report in a telephone interview that the voluntary retrenchments at Implats and across the industry were worrisome.
“We always worry (over retrenchments). Now it’s towards festive season. It means there will be families that will not enjoy the normal Xmas break. The biggest worry is that with high rate of unemployment it’s difficult to find a job as we have guys who have been in mining for 15 to 20 years and all they know is mining; where else will they find another job,” he said.
Theron, however, said Impala Platinum’s “principle concern” amid the commodity downturn afflicting the platinum sector, was “to sustain jobs and profitability as far” as possible.
But Manyathi said the platinum industry retrenchments were imposing a broader and economic-wide concern for South Africa. Intensified retrenchments also mean that the South African tax base will shrink.
“The worry should be broader than that. The government complained in the Mid-Term Budget Policy Statement that there is not enough revenue so it’s going to be worse because the more people get retrenched, the less tax base,” Manyathi said.