Amplats scales back South African mining job cuts plan

Fri May 10, 2013 8:28am EDT
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By Helen Nyambura-Mwaura and Tiisetso Motsoeneng

RUSTENBURG, South Africa (Reuters) - Anglo American Platinum (AMSJ.J: Quote) said on Friday it would cut 6,000 South African mining jobs, fewer than half the 14,000 initially proposed, as it tries to restore profits without provoking a backlash from the government and restive unions.

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

Amplats aims to reduce its platinum production by close to 10 percent or 250,000 ounces this year, equal to 4.5 percent of global output. A further 100,000 ounces a year will be cut in the medium term, the company said.

Under an original plan announced at the start of this year, Amplats had wanted to cut output by 400,000 ounces annually. The reduced job losses are likely to soften the blow for the African National Congress (ANC) government, which faces an election next year, but it remains to be seen if it appeases the anger of powerful local unions.

"Everyone is surprised. We were not expecting any retrenchment at all. We can't allow this," Sphamandla Makhanya, a worker committee member at Amplats in Rustenburg told Reuters. "But before we do anything, we are going to have a mass meeting with the workers to decide what to do next."

For Amplats, reining in costs and cutting production enough to raise the global price of platinum, which is used for emissions-capping catalytic converters in motor vehicles, is crucial to getting back to profit.

The company said it would now aim to produce 2.2 to 2.4 million ounces a year, up from the 2.1 to 2.3 million ounces targeted in the original plan. The revisions should deliver 3.8 billion rand ($423 million) in savings by 2015.

Amplats' shares extended losses on the day to be almost 3 percent lower in mid-afternoon trade in Johannesburg.   Continued...

Trucks leave an Anglo American Platinum (AMPLATS) processing plant near Rustenburg in this October 12, 2012 file photo. REUTERS/Mike Hutchings/Files