RUSTENBURG, South Africa (Reuters) - Anglo American Platinum (AMSJ.J) 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), 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.
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.
The company will now have talks with unions and chief executive Chris Griffith said this process was expected to take an additional two to three months.
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.
“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 labor 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 at more than 25 percent, the government has taken a strong line in the negotiations with Amplats.
The average South African mineworker has eight dependants, so the social and political consequences even of reduced lay-offs will be far reaching.
“If they cut my job, a lot of lives will be affected. I have a wife and two children, four of my brothers are also looking up to me,” said one miner who gave only his first name as Gift.
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.
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 ruling African National Congress.
($1 = 8.9894 South African rand)
Additional reporting by Sherilee Lakmidas in Johannesburg and Clara Ferreira-Marques in London; Writing by Ed Stoddard and Ed Cropley; Editing by Pascal Fletcher and David Stamp