Amplats’ Griffith convinced of Rustenburg sale – by Allan Seccombe ( – July 8, 2014)

[] – THE longest mining strike in South Africa’s history has forced the country’s platinum producers to consider accelerating plans to move to smaller, more productive workforces.

According to them, there’s simply no other way of coping with a volatile, unpredictable labour environment, a business restraint which is compounded by the increasingly complicated market for their metals.

Anglo American Platinum (Amplats), the world’s largest primary producer of platinum, has been the most outspoken on its plans. After spending most of 2012/13 trying to restructure its Rustenburg assets, it is now in the throes of a company-changing review.

The outcome is largely expected to see it cast off the deep-level, labour-intensive mines where the sweetest parts of the orebody have been mined out.

“Amplats’ non-core Western Limb assets, Union, and some of its marginal Rustenburg shafts may well be divested by the group in time,” JP Morgan Cazenove’s Allan Cooke and Steve Shepherd said in a recent report.

Amplats has undertaken a number of restructuring exercises at its Rustenburg mines since 2008 in an effort to restore them to profitability, but the protracted strike has undone all that work and further restructuring and layoffs appear inevitable, CEO Chris Griffith warned.

“Shareholders have bailed this company out when it was nearly R20bn in debt. Debt has gone from R4bn to R13bn now, and it keeps increasing because we’re not making money to pay for our costs and capital,” he said.

The wage demand by the Association of Mineworkers and Construction Union (AMCU) would have added R4.5bn to the Amplats wage bill of R12.5bn and that was simply unaffordable, he said.

“It’s completely irrational. We are unable to get AMCU to understand that. The reality is if we are unable to pay for costs and capital we have to either close mines or stop investing in the future and ultimately both those options undermine employment of all those working at Amplats,” he said.

“AMCU is sowing the seeds for the destruction of jobs and of the platinum industry and we have to take a sensible and rational view of the very best we can do while trying to maintain the viability of this industry,” he said.

“They don’t care. It’s all about a crusade they’ve been on since Marikana. Everything they’ve got so far has come from threats, demands and strike action. They’ve got everything they’ve needed out of force. Why should they back down from that recipe?” he said.

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