South Africa’s platinum strike could be a blessing in disguise for mining companies making the case for closures of unprofitable operations.
LONDON (MINEWEB) – One doesn’t have to be too much of a cynic to feel that the 11 week platinum miners strike primarily affecting the underground mines around Rustenburg may prove to be be a long term positive game changer for the main platinum mining companies – and Anglo American Platinum (Amplats) in particular. The world’s largest platinum miner was already struggling with the profitability of its highly labour intensive Rustenburg area platinum mines and had already proposed a mine and shaft closure programme to try and rationalise its operations and bring them into decent profitability.
Indeed its proposals of a little over a year ago involved the potential rationalisation of its Rustenburg operations into three mines – Thembelani, Siphumelele and Bathopele which between them have five shaft systems primarily working the narrow highish grade Merensky reef systems.
This would mean putting two more mines – Khuseleka and Khomanani – with four shaft systems, on long term care and maintenance with the possible loss of up to 14,000 jobs, although the company said it would have hoped to replace most of these over time with initiatives to generate new non-mining business opportunities in the area.
Amplats’ proposals were universally condemned by the mining unions and the South African government, and pressures imposed at the time appear to have led to these proposals being shelved (but presumably not forgotten). The moves would have been made to try and bring the company’s mining operations in the area on to a profitable basis as without them the company was struggling to stay in the black. Indeed one suspects that the proposals represented the minimum that may have needed to be done to preserve the miner’s long term production future for its Rustenburg mines.
With the AMCU led strike now entering its 12th week these operations have been effectively closed down and we suspect Amplats may use the strike to keep some of these mines permanently closed – as we alluded in a recent article – Union intransigence will put thousands of platinum miners out of work – permanently.
Any above inflation pay increase, which will almost certainly be acceded to by the mining companies, will just make the case for rationalisations and closures even stronger. And this won’t just apply to Amplats, but probably stimulate the other platinum miners to phase out unprofitable operations too. Rustenburg could well return to being a relatively sleepy farming backwater and tourist destination from its boom town industrial status achieved over the past couple of decades.
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