Platinum miner delays restructuring

JOHANNESBURG: Anglo American Platinum Ltd. has briefly delayed a restructuring process to allow more time for talks with the government and unions, still leaving up to 14,000 jobs at risk.
The world’s largest platinum producer, known as Amplats, has agreed to defer by two weeks a consultation on its planned layoffs — equivalent to around 3 percent of the country’s mining labor force.
Amplats wants to mothball loss-making mines as part of a turnaround plan that has drawn criticism from the African National Congress (ANC)-led government, under pressure to tackle high unemployment ahead of general elections next year.
A new cellphone video of the police shooting of 34 striking miners in South Africa in August emerged on Monday, another political flashpoint and a grim reminder of the mining violence that killed over 50 people last year.
Amplats Chief Executive Chris Griffith told Talk Radio 702 that talks with the government had been “constructive.”
“What we agreed on is we would delay the consultation process,” he said.
The legally required consultation will now start on Jan. 30 instead of Jan. 15 and last for 60 days.
South Africa boasts 80 percent of the world’s platinum deposits but producers have been hit by rising input costs, falling prices, safety stoppages and violent labor unrest.
The delay to the layoffs consultation may give Amplats more time to sell its revival plan to government or allow it to find alternatives, though analysts say these would be limited.
“I don’t actually know what they have achieved by all of this and I would be very surprised if anything changes,” said Justin Froneman, platinum analyst at SBG Securities in Johannesburg.
Amplats, which expects to post a loss for the 2012 financial year, says its outlined closure of two mines around the restive platinum belt city of Rustenburg is vital to restoring profitability.
“This is not about playing games. The company is in real trouble,” Griffith told the radio station.
Parent Anglo American, which has announced a $ 4 billion writedown to its Minas-Rio iron ore project in Brazil, is under pressure to shore up margins and shareholders will want at least part of the Amplats’ plan to go ahead.
Froneman said SBG Securities estimates the two mines to be put on “care and maintenance” — which means an indefinite stoppage of production — between them had a gross loss of about 230 million rand ($ 25.58 million) last year.
Mining minister Susan Shabangu said Amplats had betrayed government trust earlier this month by announcing the plan to mothball shafts and lay off workers.
The African National Congress has been losing support in the mines as the ANC-linked National Union of Mineworkers (NUM) bleeds members in a turf war to the far more militant Association of Mineworkers and Construction Union (AMCU).
Rank and file perceptions of both the ANC and the NUM are that both have lost touch with the concerns of poor workers, in a country where unemployment officially runs at around 25 percent but most economists believe it exceeds 40 percent.
AMCU activists have vowed to shut all of Amplats’ operations if the job cuts go ahead.
The company’s share price fell more than 2 percent in opening trade before paring losses to be about 1 percent lower.