(Reuters) – Anglo American’s platinum arm, under pressure from South Africa’s government, could announce a restructuring plan as early as Thursday that will sharply scale back job losses as it tries to balance out cost cuts and the threat of labor unrest.
Anglo American Platinum had planned to slash 14,000 jobs and mothball two mines to pull back to profit but industry sources have told Reuters that the final plan would be pared back, with as few as 5,000 jobs cut.
Militant workers have signaled they will launch protest strikes even if the job cuts fall far short of the initial target. Social tensions are running high after violence rooted in a labor turf war killed over 50 people last year and sparked illegal strikes that hammered production.
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 automobiles, is absolutely crucial after it fell into a loss last year.
“From the point of view of Amplats itself, both numbers will be critical, how many ounces will you produce, but also how many people, because that impacts on the cost base,” said Alison Turner, an analyst at Panmure Gordon.
It is also vital to the fortunes of Anglo American as it tries to turn around at a time when commodity prices are starting to slump.
Militant labor leaders, who closed mines in protest around the platinum belt city of Rustenburg for a day in January when the plans were first unveiled, have said even a scaled back proposal to cut 5,000 or so jobs would be seen as too many.
“Obviously, we will not allow this to happen. If they close one operation, we have vowed among ourselves that all of these operations must stop,” Evans Ramokga, an Amplats miner and activist associated with the militant Association of Mineworkers and Construction Union (AMCU), told Reuters by phone.
UNION TURF WAR
AMCU emerged as the dominant union in the platinum shafts last year after a bloody tussle that saw it poach tens of thousands of members from the National Union of Mineworkers (NUM), a key political ally of the ruling African National Congress (ANC).
South African platinum producer Lonmin said on Thursday that AMCU now represented 70 percent of its main local workforce, reflecting the ongoing union membership struggle.
The company added it was working to finalize a union representation agreement with AMCU, the NUM and other smaller unions to get wage talks off the ground.
The union power struggle explains why the ANC and the government have taken such a hard line on the proposed Amplats cuts, a striking contrast to past positions when the gold industry was allowed over the course of a decade to cut tens of thousands of jobs to remain sustainable.
When Amplats announced the plan in January, the mining minister furiously accused the company of betrayal. Amplats has been in talks with the South African government for months to hammer out the agreed restructuring plan expected this week.
General elections are due next year, and for the ANC, the union war means it has lost tens of thousands of potential voters and their many dependents as the NUM is a vehicle for campaigning and getting out the working class vote.
(Additional reporting by Clara Ferreira-Marques in London; Editing by Mark Potter and Pascal Fletcher)