Mining likely to see more job losses
Among the companies that have announced staff cuts are Anglo American and Sibanye Stillwater
South Africa’s mining sector has suffered job losses in recent months with companies citing weaker commodity prices and unprofitable operations, and the first half of 2024 is likely to see more of the same. But companies are also guilty of failing to take advantage of an earlier boom in prices to invest locally, instead taking the money overseas, some analysts said.
Last week, Sibanye Stillwater said it was embarking on another round of retrenchment talks for its gold operations that could affect about 4 000 employees and contractors. The diversified mining company said the job shedding was due to restructuring which could potentially affect 3 107 employees and 915 contractors.
Earlier this year Sibanye said it had cut 2 600 jobs at its South African platinum mines after discussions with labour unions over restructuring unprofitable operations.
Elsewhere in the sector, Impala Platinum (Implats) said it might halt operations at some of its South African platinum mining shafts if turnaround efforts in the wake of plummeting prices of the metal fail. Chief executive Nico Muller said some of the operations could either be placed on care and maintenance as the company attempted to cut costs and save capital.
Anglo American (Amplats) said that a restructuring of its South African PGM operations could affect as many as 3 700 employees.
“Only when the consultation process is concluded will the final number of impacted jobs be known. In parallel, we have initiated a contractor/vendor review process that could impact approximately 620 service providers/contractors,” Amplats chief executive Craig Miller said.
During the fourth quarter of 2023 the mining sector, which employed about 477 000 people last year, shed 1 000 jobs, according to Statistics South Africa.
The mining job losses come amid a decline in the platinum group metals (PGM) basket price over the past 12 months. According to a report by the World Platinum Investment Council released in December, the PGM basket price fell by 40% over the year.
“The extent to which prices have fallen raises concerns about the longterm sustainability of several operations,” the report read.
Companies must shoulder some blame for failing to make hay while the sun shone, said veteran mining analyst Peter Major. He noted that producers in the PGMS sector had
made a “truckload” of money during the boom of a few years ago, but most of the money went abroad.
“CEOS always forget that the high prices do not last and so instead of putting all that money in the mines, they put it overseas,” Major said.
“Amplats and Northam Platinum were the most sober and most prudent so they should not be laying off anyone, but Sibanye and Impala spent billions overseas. That is why there are retrenchments.
“South Africa is not a great place to invest in the mining industry. It will continue losing jobs because there are no investments coming in. The policy is too negative, mining licences take two years and the cadastre system is in tatters. New jobs in SA will not be coming from mining,” Major added.
The iron ore sector has also not been spared from job cuts, mostly as a result of logistics constraints at state-owned rail, port and pipeline company Transnet which have left companies unable to export the mineral, according to Hugo Pienaar, the chief economist at the Minerals Council South Africa
Earlier this year Anglo American’s iron ore unit, Kumba, proposed a reorganisation that may affect about 490 jobs because of logistics bottlenecks.
“During 2023, we already streamlined our office-based roles and given the required change to our production footprint in the medium term, we do also need to reconfigure the size of our workforce,” chief executive Mpumi Zikalala said.
Pienaar predicted further job cuts for the mining industry in 2024, with the coal sector not being spared as the price of the commodity has also fallen. Coal producers have been hit by logistics constraints at Transnet.
According to Trading Economics, coal futures have decreased by 27% over the past year.
Job cuts are not always the first option for companies, Pienaar said.
“They first try to cut other costs such as reducing capital expenditures, sometimes they reduce the dividend payment but if those cost measures do not prove to be sufficient and you have sustained lower prices then unfortunately you do tend to see job losses,” he said.
The gold industry appears to be on a better footing, with Harmony Gold, for example, entering into a five-year wage agreement with unions. The deal is expected to bring stability and will see a pay increase of about 6% a year for the company’s employees.
This comes as the price of gold bounds higher, surpassing $2 400 an ounce for the first time ever last week, because the commodity is seen as a safe haven asset amid concerns about the conflict in the Middle East.
But the sector is merely retaining jobs, rather than growing them, Pienaar noted.
“Even with the high gold price increases I don’t think we are going to see much increase in job numbers. But these elevated gold prices will most likely sustain current operations and employment in the gold mining sector,” Pienaar said.
Major said there had been almost no investment in South Africa’s gold mines since 1994.
“We are mining very little gold and had they put development into it, they would not be laying people off,” he said.