Amplats to slash platinum production, 6,000 jobs, in South Africa – by Geoffrey York (Globe and Mail – May 11, 2013)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

JOHANNESBURG — The world’s biggest platinum producer, Anglo American Platinum, has announced plans to cut 6,000 jobs from its South African mines, triggering fears of a major battle with trade unions as the platinum sector struggles with mounting losses.

The announcement was immediately greeted by furious criticism from South Africa’s powerful unions, raising the spectre of another season of violent clashes in a country where dozens of workers were killed last year.

But the company, known as Amplats, insisted that it had to reduce production in its platinum mines after suffering heavy losses last year. One study estimated that 70 per cent of all South African platinum mines were operating at a loss last year because of rising costs, oversupply and falling prices.

Amplats had originally intended to cut 14,000 jobs from a work force of about 56,000 employees. But when its plan was first mentioned in January, the South African government was outraged, accusing the company of behaving like “a child.”

The company agreed to suspend the plan while it discussed the issue with the government, but on Friday it announced that it would still go ahead with deep cuts to its production and job levels.

The decision is expected to cut production by about 250,000 ounces at the Amplats mines next year – about 11 per cent of its total production – and it will be followed by further cuts of 100,000 ounces in following years. Three mine shafts in the Rustenburg area will be idled. The restructuring of its mining operations will cost the company about $250-million (U.S.).

The restructuring plan “retains flexibility, reduces complexity and will position us to achieve our goal of creating a sustainable and profitable platinum business,” Amplats chief executive officer Chris Griffith said in a statement.

South Africa and Russia, which control about 90 per cent of the world’s supply of platinum group metals, announced in March that they will try to create an OPEC-style trading bloc to control exports and limit supply. Many analysts are skeptical that the idea will work, since private companies largely control the supply, but it was a symptom of the growing crisis in the platinum industry.

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