Mantashe lashes out at Impala job cuts
• Miner seeks to save Rustenburg operations • Minister accuses mining house of arrogance
Impala Platinum, the world’s second biggest platinum miner, has ignited a political firestorm by announcing plans to cut its workforce by 13,000 people, close or sell five shafts and cut output by 230,000oz to save its Rustenburg mining area.
The R2.7bn two-year restructuring of its 11 shafts, which form the heart of the company, was met with withering criticism from Mineral Resources Minister and former general secretary of the National Union of Mineworkers Gwede Mantashe, who accused Implats of “arrogance” and working against the national interest.
Mantashe’s public comments in a tweet were at odds with those from Implats CEO Nico Muller, who, while warning of an adverse reaction from the Department of Mineral Resources and organised labour, said there had been “extensive” talks with both parties and that the department, which it had approached in terms of a clause in the Mineral and Petroleum Resources Development Act, had been “supportive”.
What is clear from Muller is that Implats has no choice and cannot continue burning through R3.5bn a year at its Rustenburg mines, of which just two are profitable. It will not back down from reducing its workforce to 27,000 people from 40,000, be it through severances or the sale of one or more mines.
The local platinum sector, the world’s leading source of platinum group metals, has shrunk to below 170,000 jobs from a peak of 200,000 a decade ago. The cuts envisioned by Implats and Lonmin will bring employment to pre-2004 levels of close to 140,000.
In 2013, Anglo American Platinum was forced to back away from the 14,000 job cuts it
wanted to implement at its Rustenburg mines by an overtly hostile Susan Shabangu, the then-mines minister, who threatened the company’s mining rights as well as those of parent Anglo American.
Lonmin, which is a takeover target of Sibanye-Stillwater, is in the process of shedding 12,600 jobs as it closes old mines and focuses on newer, lower-cost operations. Both Implats and Lonmin have mines in the Rustenburg area.
Implats considered various options for the future, ranging from an outright sale of the listed company, the sale of all or part of the Rustenburg mines and the complete closure of all 11 shafts.
However, it has come up with a plan that will keep six mines and a base load of at least 450,000oz of platinum a year for the next 15 years.
It has two new shafts ramping up to full production, combined with the two profitable shafts and two more it is sure will be returned to profit.
Anything less than 450,000oz and the entire Rustenburg business would have to close.
That base load was enough to keep its concentrators and two of three furnaces operational.
“The company will still go through at least two years of big trouble; big numbers of people being cut, a high probability of labour unrest, low morale impacting output and safety,” said Nedbank analyst Leon Esterhuizen.
Muller said Implats was acutely aware of the social consequences and was phasing its restructuring over a two-year period, seeking out buyers or contract miners at some of the shafts it no longer wanted.
Statistics SA data show the mining sector has lost 52,000 jobs in the first half of 2018.
Muller said the local platinum industry would need to cut between 600,000oz and 800,000oz of platinum and keep it out of the market to push prices up from the near-decade lows of $815/oz it had fallen to in recent weeks. This was on top of the 850,000oz that had already come out of the market from shaft closures to date. The 230,000oz cut by Implats in the next two years was unlikely to have a major effect on the platinum price, he said.