AngloGold may axe third of workforce
• Costs at Kopanang and Savuka unsustainable • Mining union ‘angry and shocked’ at decision
AngloGold Ashanti, the world’s third-largest gold miner, could cut up to 8,500 jobs, or a third of its South African workforce, as two unprofitable mines reach the end of their lives.
In SA, the mining industry has shed 70,000 jobs over the past five years because of high costs, volatile commodity prices and — in the case of platinum, stagnant, weak prices — as well as declining productivity.
“This is a difficult decision, which follows a period of significant and, ultimately, unsustainable losses and also the evaluation of the options available to return our South African business to profitability,” said Srinivasan Venkatakrishnan, the CEO of AngloGold.
“It is critical that we act to protect the long-term sustainability of this business and the majority of our workforce.”
Citigroup pointed out that the two mines due for closure operated at about double the AngloGold cost average of $744/oz in 2016 and that stopping the mines would enhance the company’s headline earnings a share about 10% a year, excluding oneoff restructuring costs.
AngloGold will enter a 60day process at the Commission for Conciliation, Mediation and Arbitration with organised labour to mitigate the size of the reduction of its 28,000-strong workforce in SA.
But the depletion over decades of the ore bodies at Kopanang and Savuka means their costs are too high and AngloGold can no longer sustain the hefty losses incurred by the mines.
The National Union of Mineworkers was “angry and shocked” at the decision and said it was the second local retrenchment process in six months at AngloGold.
While Kopanang might be an asset that could be bought by a third party, the Savuka mine is part of the TauTona operation and will not be sold.
AngloGold is wary of selling the mine because of the dismal track record in such sales, following the Aurora Empowerment Systems debacle at the Grootvlei and Orkney gold mines, the fiasco at Blyvoor-
uitzicht and the poor performance by Pamodzi Gold.
“If we were to look at any option of selling Kopanang, it would be with a party that has the wherewithal to responsibly operate and properly handle their full obligations to employees and closure of the mine,” said AngloGold spokesman Stewart Bailey.
“There are too many examples in this industry of fly-bynight companies absconding without doing those things. We are very aware of sorting out an immediate problem, but creating a longer-term problem.”
AngloGold is looking at ways of wrapping part of the highcost TauTona operation close to Klerksdorp into its nearby Mponeng mine — the world’s deepest mine — to cut costs.
If the company is unable to find a way to bring down costs at TauTona, it too could come under a review process with consequent job losses.
AngloGold was at pains on Wednesday to stress that the suspension of Kopanang and Savuka had nothing to do with the onerous Mining Charter released on June 15.
It was purely a business decision that had to be made after years of keeping the two mines in intensive care to avoid job losses and to seek out alternatives to shutting them.
When it was released on June 15, the Mining Charter sparked warnings from lawyers including Fasken Martineau’s Andrew Mitchell, that dealmaking in SA would freeze under its onerous demands.
Trade union Solidarity’s deputy general secretary Connie Prinsloo said more jobs would be lost in the industry because of the charter.