Unions in talks to save jobs at AngloGold

DESPITE a 5.4% increase in the gold price over the past year and the weak rand offering South African gold-mining companies better cash flow this financial year, AngloGold Ashanti appears set to shed hundreds of jobs.

The third-largest gold producer in world has suffered from declining gold ore grades since 2013 and increasing operational costs.

Last year, after a challenging operational year in its South African businesses and currency volatility hitting some of its businesses abroad, AngloGold revised its production outlook to between 3.6 million and 3.65 million ounces from a previous forecast of between 3.6 million and 3.8 million ounces. Total cash costs were increased to between $730 and $750 an ounce from the previous $680 to $720 range.

All mining companies have restructured in the past three years. But for AngloGold — which sold Cripple Creek & Victor gold mine in the US, held off on some of its brownfields and greenfields projects, and tried to cut costs to save the business after a drastic drop in commodity prices in the first half of last year — the tide has not yet turned.

The company is now in talks with unions about cutting jobs at its South African operations. It is expected that about 850 jobs will be shed.

AngloGold spokesman Chris Nthite, who would not reveal how many jobs were on the line, said the company’s operations abroad were not affected.

“The South African operations face unique circumstances including declining production, escalating unit costs and maturing operations. Addressing these issues will help manage and reduce the region’s oversized footprint and ensure AngloGold Ashanti’s longevity,” he said.

This week, the National Union of Mineworkers, which is the majority union at AngloGold Ashanti, said in a statement it had reached an agreement with AngloGold not to cut jobs.

Instead, workers would be transferred to other operations or reskilled for other positions within the company.

However, on Thursday Solidarity trade union’s mining deputy general secretary, Connie Prinsloo, said: “Of course Solidarity will be glad for every job that can possibly be saved, but no agreements have been reached.”

Nthite said the company was in talks with organised labour to explore steps to mitigate job losses.

“This engagement is ongoing and it remains too early to preempt an outcome,” he said.

NUM spokesman Livhuwani Mammburu said the union was aware of the declining number of jobs in the gold sector and believed skills development would help save some of its members’ jobs.

“It’s part of the solution moving forward . . . new skills will be an avoidance measure to retrenchments,” he said.

Mammburu said in the past, companies had not been willing to train workers to fill, for example, engineering and environmental management posts, preferring to source these skills from outside.

According to the Chamber of Mines, the number of people employed in the gold-mining industry has declined since the ’80s from about 475 000 to 120 000.

AngloGold employs about 25 000 people in its South African operations.

Mammburu said it had been agreed that no one should be forced out of work and that employees should be repositioned in the company with new skills or transferred to other operations.

Leon Esterhuizen, an analyst at Nedbank, said although the number of jobs in the gold-mining industry had been falling for many years, job cuts were not necessarily inevitable.

It’s part of the solution . . . new skills will help mines to avoid retrenchments

However, given the problems facing the mining industry, there was almost no way — other than to continue to reduce labour and produce less — to keep what was left of the gold-mining industry going.

Esterhuizen said this was because mining companies received no assistance from the government or unions and metal prices were particularly low compared to historical levels. There was nothing assisting gold-mining companies to grow.

AngloGold’s shafts were nearing the end of their lifespans and the company was trying to optimise the remaining life of some of its mines by increasing efficiency.

The company was also testing ways of gaining access to deeper gold ore grades.

To that end it was considering using a reef-boring machine that had the potential to increase safety for employees but would also mean further jobs cuts in the future.

Esterhuizen said although investing in the latest mining technology appeared to be a simple solution, if there was a battle to survive then there would simply be no money to do so.