Anglo American Platinum scales back South African mining job cuts plan

http://www.guardian.co.uk/business/2013/may/10/amplats-mining-job-cuts

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Anglo American Platinum is to cut 6,000 South African mining jobs, fewer than half the 14,000 initially proposed, as it strives to restore profits without triggering a backlash from the government and restive unions.

The world's top platinum producer, a unit of Anglo American, added in an announcement on Friday that it would also keep open one of four shafts slated for closure near the platinum belt city of Rustenburg.

However, the cuts will take around 7  tonnes out of global platinum production this year and a further 2.8 tonnes a year in the medium term, the company said. Initially, Amplats had wanted to cut output by 11 tonnes.

The reduced number of job losses is likely to soften the blow for South Africa's ruling African National Congress (ANC), which faces an election next year, but it remains to be seen if it appeases the anger of powerful local unions.

Industry sources had told Reuters last week the final plan, hammered out after months of tough talks with the government, would demand as few as 5,000 redundancies.

Hours before the announcement, activists from the militant Association of Mineworkers and Construction Union (AMCU) in Rustenburg, where the main impact of the lay-offs will be felt, said they would not tolerate any job losses.

"Even if it's 5,000 or 6,000 jobs, they must not be lost. Where will 6,000 people in this economy go? They will engage in criminality," Simon Hlongwane, a winch operator and AMCU branch secretary at Amplats' Thembelani mine, told Reuters.

"We as AMCU stand ready to fight."

Social tensions are running high after violence rooted in a turf war between AMCU and the dominant National Union of Mineworkers (NUM) killed more than 50 people last year and provoked illegal strikes that hit production.

The unrest was a major reason why Amplats suffered its first loss last year.

With unemployment running at more than 25% and elections due next year, the government has taken a strong line in talks with Amplats.

The average South African mineworker has eight dependants, so the social and political consequences even of reduced lay-offs will prove far reaching.

AMCU has made good on strike promises in the past, including in January when it briefly closed several mines when the initial Amplats plan was unveiled. Its leaders said in Johannesburg on Thursday they would not back such wildcat strike action.

For Amplats, reining in costs and cutting production to such an extent that it lifts the price of platinum – used for emissions-capping catalytic converters in motor vehicles – is crucial to getting back to profit.

AMCU emerged as the dominant union in the platinum shafts last year after it poached tens of thousands of disgruntled members from the NUM, a political ally of the ANC.