Haemorrhaging mining jobs
Harmony plans to cut 400
THE MINING industry is haemorrhaging jobs in South Africa with the planned cuts of 400 jobs at Harmony Gold’s marginal Masimong mine in the Free State, during the June quarter, the latest salvo that is set to earn the wrath of the unions.
The industry has blamed falling metal prices, input cost increases – including double digit power hikes, labour costs, marginal shafts, as well as the loss of business confidence in the country for the tough mining environment.
Last week BHP Billiton said it was simplifying its portfolio by demerging a group of high quality assets to create South32.
Lonmin, the third biggest platinum producer, also said 3 500 employees or 10 percent of its labour force would be cut because of weak metal prices.
Harmony chief executive Graham Briggs said the company was left with no choice but to streamline its operations. He said Masimong, the Hidden Valley Mine in Papua New Guinea and Doornkop, south-west of Johannesburg, would be restructured.
“We have responded to a lower gold price, first by rationalising our assets and then restructuring our portfolio – cutting costs, reducing labour numbers and focusing on mining only safe, profitable ounces,” Briggs said. In February, Harmony restructured its Kusasalethu mine, resulting in the loss of 1 271 jobs.
Peter Major at Cadiz Corporate Solutions said low productivity, legislation uncertainty and labour challenges were killing the industry, not the weak commodity prices.
“You cannot pray for the metal price to go up. I think the current commodity prices are above average, but the environment is toxic. Mines are losing money because productivity levels are low compared to other countries,” Major said.
The National Union of Mineworkers (NUM) claims that 35 000 jobs have been lost in the platinum sector, and 10 000 jobs in the gold sector since 2012. The union has previously said almost 2 235 jobs have been cut in the iron ore industry and 1 399 have been cut in the chrome industry.
There was uncertainty ahead of the upcoming gold wage negotiations set to begin next month.
“We cannot sit and relax… as the NUM (we) will fight the retrenchments at Masimong. The first step is to engage the company, and come up with strategies to save jobs. We are worried that these retrenchments in mining have become blood baths of retrenchments,” Livhuwani Mammburu, the acting NUM national spokesman, said.
Anglo American Platinum, the world’s biggest platinum producer, received a backlash from unions and the government after it said it planned to cut 14 000 jobs at its lossmaking Rustenburg operations in 2013. The company sold its Rustenburg operations and revised the figure to 6 000.
Gideon du Plessis, Solidarity’s general secretary, said on Friday that Harmony’s job cuts were a surprise.
“We are wary of Harmony’s announcement. They are using an old trick by announcing retrenchments before wage talks set to start next month. Harmony is making the announcement as a tactic to put pressure on unions ahead of the wage talks,” he said.
The majority of mining companies face a perfect storm and grapple with increasing mining costs and subdued demand from India and China.
A crippling five month platinum wage strike led by the Association of Mineworkers and Construction Union (Amcu) in 2012 had also dented confidence in the mining industry.
Lonmin said forced retrenchments would be a final resort, and voluntary retrenchments would be pursued instead.
“We need to make difficult decisions to maintain the resilience of our business and protect employment,” chief executive Ben Magara said last week. Extremely shocked On Friday, the NUM said it would fight Lonmin’s job cuts and was extremely shocked to hear of Lonmin’s plan.
“The NUM has not yet been officially consulted by Lonmin to tell us what exactly is their plan. We wish that these job losses can be avoided and as the NUM we will do our best to engage the company to save jobs,” Erick Gcilitshana, the NUM’s chief negotiator at Lonmin, said.
There was uncertainty ahead of the upcoming gold wage negotiations set to begin next month. Sibanye Gold chief executive Neal Froneman warned against inflated wage demands last week, saying these might lead to retrenchments.
Of the 400 job cuts at Harmony’s Masimong mine, 150 employees would be transferred to other operations, Briggs said. Masimong has struggled with low grades, and Doornkop’s performance has been disappointing due to grade and volume constraints.
“Doornkop posted a net loss in the last three quarters and we are investigating alternatives to return the mine to profitability, which includes restructuring,” Briggs said.
Harmony’s gold production for the March quarter was affected by slow start-ups after the December holidays, and safety stoppages. Its gold production declined by 10 percent (817kg) to 7 642kg in the March quarter compared with the December quarter (8 459kg).
Despite lower gold production, profit increased by 4 percent to R643 million in the March quarter compared with R618m in the previous quarter.
Harmony reduced its headline loss per share from 114c in the December quarter, to 60c in the March quarter.
Harmony shares were up 2.63 percent at R21.04 on Friday, while Lonmin was down 0.23 percent at R26.