Mining CEOs warn of more job losses
J– Impala Platinum Chief Executive Officer (CEO) Nico Muller joined a chorus of mining CEOs warning that more job cuts are on the horizon as reducing costs becomes required to keep the industry profitable.
Muller told eNCA that if Implats cannot reduce its costs, the mine risks undergoing significant restructuring or absolute closure.
He explained that the mining industry – particularly Platinum Group Metal (PGM) miners – is under significant pressure.
This comes after the Johannesburg-based mine reported weak results for the six months through December 2023.
Profits plunged to 88 per cent as it followed peers by reporting much lower earnings because of the plummeting PGM price. Implats’ basic earnings dropped to R1.6 billion durirng the six-month period.
“If you look at all of the major forces impacting PGM prices, it is clear that there are significant downward pressures on the prices,” he said.
“I think the world is in consensus that a major recovery is not expected in the near term. It is therefore reasonable to expect – with continued cost inflation – that we are at risk.”
Costs
Muller said this is despite Implats having taken several measures to cut down costs. For example, Implats’s latest results revealed that the company has been able to mitigate its cost increases to only three per cent on a like-for-like basis, significantly below global inflation.
In addition, the company has reduced its labour force by three per cent by not recruiting in non-critical positions. In November 2023, Implats started offering voluntary job cuts to miners at its South African mines.
“However, in the absence of a price recovery, I think there’s a high probability that we are going to be forced into some form of restructuring exercises, which is why at the moment, we are engaging with all of our stakeholders to discuss mitigation plans,” Muller said.
“If we do not act proactively and reduce our overhead costs, including labour, we are going to consider putting some of our operations on care and maintenance or absolute closure, and we are trying to avoid that at all costs.”
Pressure
Muller is not the only mining CEO to have warned about the significant pressure the industry is on – and what this could mean for jobs in South Africa.
Sibanye-Stillwater CEO Neal Froneman warned in October 2023 that the mining giant may be forced to close unprofitable shafts and cut jobs as prices of PGMs continue to plummet.
“We certainly can’t run unprofitable shafts, and our cost structure is probably the lowest in the industry,” said Froneman.
“So if we have loss-making shafts, of which we have a few, they will have to be closed, and I say this with all the sensitivities on potential job losses.”
This warning became a reality when, later that month, Sibanye announced it would enter into Section 189 consultations to retrench over 4 000 workers amid the company’s restructuring.
Impacted
The company said above-inflation increases in key cost components such as electricity, water, wages and fuel, combined with the recent decline in PGM prices, have significantly impacted the global PGM industry’s profitability, including Sibanye-Stillwater’s South African operations.
It said certain operating shafts are now loss-making and pose a risk to the sustainability of the remaining operations.
Anglo American Platinum also recently proposed a restructuring of its business that may affect about 4,300 jobs across its South African operations.
The section 189A process involves a consultation period with trade unions and affected employees and will be facilitated by the Commission for Conciliation, Mediation and Arbitration.