Mining jobs bloodbath tackled in crisis talks
Plan to be adopted next week after proposals mulled
IN EMERGENCY talks starting yesterday the state, unions and mining houses mulled proposals to stem the looming job cuts in the industry.
The participants were under pressure to come up with solutions as Mineral Resources Minister Ngoako Ramatlhodi demanded commitments from all parties towards mitigating retrenchments.
Last night the Department of Mineral Resources said proposals by stakeholders would be considered over the next few days in Pretoria and a consolidated plan would be adopted by industry principals next week.
Slumping commodities prices and cost pressures are causing a jobs bloodbath in SA. At the same time unions have been adamant about above-inflation wage increases.
Anglo American said last week it would reduce its global workforce from 150,000 to below 100,000 by 2017, through disposals and retrenchments, and Lonmin could cut up to 6,000 jobs as it suspends uneconomic shafts at its Rustenburg operations.
Glencore has put its Optimum Colliery into business rescue, resulting in 359 forced retrenchments. That was met by a suspension of the operation’s mining licence.
Mr Ramatlhodi yesterday summoned leaders from business and labour for the crisis talks but many of the structural issues and problems they were due to discuss have been on the agenda for years. “None of us must leave here without committing something to the table,” he said, “it’s about jobs, jobs, jobs.”
Mr Ramatlhodi said government departments would speed up efforts to co-ordinate better in matters affecting the mining industry; the issuing of water licences would be expedited, for instance; and the government would assist companies with power outages.
Earlier yesterday, cautious notes were struck by both the Chamber of Mines and organised labour.
Chamber president Mike Teke said producers were facing commodity slumps but among the things being sought by producers was “expediting the challenges with energy”.
The two largest mining unions, the National Union of Mineworkers (NUM) and Association of Mineworkers and Construction Union ( Amcu) both said companies’ failure to spread benefits to workers during boom periods would mean that they were not prepared to settle for below-par wage increases during downturns.
“Our position is very clear — we are going to oppose any restructuring. These companies were making a lot of money before. They have reserves and must use these reserves to cater for the current crisis,” NUM deputy president Joseph Montisetsi said.
Amcu president Joseph Mathunjwa said it would continue to use strikes to press for wage increases. “These wages are not to have a luxury life. They are just to meet social daily needs … I don’t know how much workers should take the knock.”
Political analyst Nic Borain said the real problems facing the industry were the slowdown in Chinese growth and structural changes to the global economy.
“These are not likely to be solved by a government task team … these will have to play themselves out.” The extent to which the state could help was unclear, he said.
RETRENCHMENT is experienced by too many people too often in the country. Mineral Resources Minister Ngoako Ramatlhodi’s anxiety as another round of job losses looms is therefore understandable.
However, suspending Glencore’s Optimum Colliery licence, regardless of which party is right, does not a sustainable solution make. While it is true that the retrenchment affects 359 employees, there are hundreds more who face the prospect of joblessness if the mine is shut down while the dispute rages.
The step is also an indication that relations between the parties involved, including the unions, have broken down.
This does not bode well when the industry is undergoing severe strain and it needs all its stakeholders to work together to take and implement difficult decisions. These decisions should have the sole aim of ensuring the long-term sustainability of the whole sector.
Resolving such procedural disputes unfortunately does not address the fundamental problems. While it is possible to sustain an argument that Optimum should have negotiated a contract with Eskom that could withstand cyclical fluctuations, the reality is that the mine has become unprofitable. Something had to give, which meant either cutting jobs or striking a new deal with the utility.
Eskom is unlikely to agree to paying more for coal when those costs are its largest expense by far, and it has said it expects Optimum to honour its contractual obligations. Glencore has put Optimum into business rescue, it says, because of the uneconomic contract with Eskom.
Commodity prices are depressed and even though coal has not been as hard hit as platinum, gold and iron ore, it has come under renewed focus with the US’s push towards renewable energy as part of its drive to cut greenhouse gas emissions. Prices are expected to remain depressed for quite some time. But production and input costs are rising steadily every year. The platinum group metals sector is not doing well either, also due to depressed prices and high production costs.
In this environment, SA has two choices. The first is to continue burying its head in the sand and pretend that endless negotiation to maintain the status quo will help. This is pure fantasy and will only create deeper problems later.
The second option is to take an honest look at the current and historical state of affairs and realise the sector can no longer play hide and seek with harsh global realities. If there is weak demand, and prices are declining, then it is extremely difficult to remain profitable.
This means supply has to be curtailed, in particular from operations that are unprofitable. Sadly this means job losses, but the industry must rely on guidance from the Mining Charter, which makes it mandatory to equip employees with skills that would help them find work outside mining.
It is difficult to see how any of the country’s mining companies can continue to employ the same number of people when supply and prices are set to decline for the foreseeable future.
This is a simple economic reality that can no longer be ignored.
This is why we believe that wagging a finger at mining companies is an exercise in futility.
While the specific matter concerning Glencore’s Optimum mine must run its course in terms of what is prescribed in law, it does not change its status as a proxy for a larger, more threatening and complex reality.
It is our sincere hope that the discussions taking place among all players will finally yield commitments that will help the industry survive — no matter how difficult things become.