Caught by surprise: unions scramble for way out of miner Kumba’s planned retrenchments

Kumba Iron Ore CEO Mpumi Zikalala. Photo: Supplied

Kumba Iron Ore CEO Mpumi Zikalala. Photo: Supplied

Published Feb 21, 2024


Kumba Iron Ore’s plans to lay off 490 employees came as a surprise to its employees yesterday, leaving workers’ unions scrambling for solutions to stem the tide of retrenchments in the key industry after Anglo American Platinum also notified of an intent to reduce its workforce by 3700 workers.

The downturn in some commodity prices and constraints with electricity and rail as well as port constraints have left South African bulk commodity miners in the lurch. Many of them, including Kumba, Anglo Platinum and ArcelorMittal South Africa among others had started stream-lining operations and laying off staff.

Mpumi Zikalala, the CEO of Kumba, said: “Macro-economic volatility and uncertainty continued to weigh on global markets with geopolitical tension escalating and persistent cost inflation amidst multi-year high interest rates. Domestically, businesses were further impacted by load shedding and logistics constraints, increasing the cost of doing business in South Africa.“

She said while the firm was encouraged by the Cabinet’s approval of the Freight Logistics Roadmap that would allow for greater and much needed private sector participation in the logistics sector.

However, logistics challenges would take some time to resolve and unless Kumba acted now to align its production and cost base to current logistics constraints, this business would not have the resilience it needed to deliver across its stakeholders.

Zikalala said following a strategic review in 2023, Kumba had been reconfiguring its business to an overall lower production profile of 35-37 Mt (million tons) for the period 2024-2026. This was in line with prevailing logistics capacity and announced a proposed reconfiguration process, involving job losses.

For Kumba Iron Ore, this was likely to result in the laying off of 490 employees and 160 service providers/contractors. Some office roles have already been restructured while the company has moved in to reduce contractors and suppliers too.

“The potential reconfiguration of our business is expected to impact 490 jobs (including fixed-term employees) across Kumba’s operations. In parallel, a contractor/vendor review process is underway that may see 160 service providers/contractors impacted (resulting) in some of the contractor services being re-scoped or terminated as part of the business reconfiguration process,” Zikalala said.

Gideon du Plessi, the secretary general for trade union, Solidarity, told Business Report yesterday that the massive lay-off planned by Kumba Iron Ore had come as a surprise to mine-workers.

The National Union of Metal Workers South Africa (Numsa) was equally “dismayed” at the lay-offs being planned by the company.

Jim Irvin, the general secretary for Numsa, said by phone that the failures by Transnet to move bulk commodities was common across many of the South African mining companies laying off workers.

“As the labour movement we must refuse that workers must pay for the crisis of capitalism that always goes through booms and bursts. What is extremely irritating is that the mining bosses enjoy maximising on profits when there are booms and when there are bursts they all want to maintain the same levels of profitability hence they always target poor workers for retrenchments, instead of target their fat salaries and expensive perks,” said Irvin.

He blamed the Department of Public Enterprises led by Minister Pravin Gordhan, whom he described as a “disaster in managing state owned enterprises (SOEs)” for the inefficiencies in Eskom and the rail and port bottlenecks by Transnet that had now “reached crisis” levels.

With Impala Platinum, Anglo Platinum, Sibanye-Stillwater and Kumba Iron Ore having announced retrenchments, President Cyril Ramaphosa’s administration now needs “to urgently intervene to stem the tide of retrenchments in the mining industry,” the Confederation of South African Trade Unions told Business Report.

“Cosatu is deeply worried about the number of retrenchment notifications being issued across mining companies. The leadership of government and business need to act to avert this potential jobs bloodbath in the mining sector,” Cosatu spokesperson Matthew Parks said in an interview.

He said that although the signs of massive job losses in this sector had been clear for some time, there had been no concrete actions from government and business to turn this situation around.

Cosatu suggested that the government provide additional support to help Eskom end load shedding and to advance a “decisive package of urgent interventions to secure and rebuild Transnet Freight Rail” as well as unblocking and modernising South Africa’s ports.

Fast-tracking the implementation of the new mining rights application system to revive investments in the mining sector, engagements in good faith by employers with unions in the sector to identify alternatives to sending mine workers to the unemployment queue and interventions by shareholders to release the exorbitant salaries of mining executives to help pay mine workers were also seen by Cosatu as helpful for the sector.

“What we cannot is to abandon mine workers who have built this economy. Cosatu and its tireless affiliate, the National Union of Mineworkers (NUM) will continue engaging government and business on urgent interventions and solutions,” said Parks.