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Amplats offers new non-mining job for every mining job lost
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15th January 2013
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JOHANNESBURG (miningweekly.com) – Anglo American Platinum (Amplats), which is setting out to create at least one new non-mining job for every mining job lost in its proposed downsizing, saw its own share price and the global platinum price rise after announcing the most far-reaching restructuring of its 58-year history, which proposes that two mines close, four shafts be mothballed, a mine be put up for sale and the 14 000 mining jobs earmarked for shedding be matched by the creation of at least an equal number of new non-mining jobs.

In addition to redeploying one-third of 14 000 people back into the rest Anglo American group and the mining industry as a whole, Amplats is offering a new non-mining job opportunity, on top of a retrenchment package, to each of the employees who cannot be placed in another mining job and are forced to enter the non-mining space.

The aim in reducing the employee complement to 45 000 is to be job neutral.

“We’ll seek to ensure that we compensate for any necessary labour restructuring through the creation of an equivalent number of non-mining jobs,” Amplats CEO Chris Griffith said.

This saw its share price rise 1.28% on the JSE to R497.30 before 10 am and the platinum price rise to $1 691/oz, overtaking a gold price of $1 653/oz.

But after Mineral Resources Minister Susan Shabangu set off a political row the share price fell by more than 4% to R464.87, with the Minister reiterating that she had not been consulted and her rejection of the Amplats' non-mining job-creation plan as "not workable".

Liberum Capital analyst Ben Davis saw the jobs-neutral target as being “very optimistic", given the continuing 25% South African unemployment rate.

Davis noted further that the news of 400 000 oz/y of capacity being put on care-and-maintenance had resulted in the platinum price rising above the gold price for the first time since March 2012.

But South Africa's Chamber of Mines CEO Bheki Sibiya applauded Amplats for setting out to create new non-mining jobs in housing, infrastructure and small business development in Rustenburg and labour-sending areas to make amends for the mining jobs lost.

Griffith told Mining Weekly Online that two job initiatives were being proposed: the first was the redeployment of Amplats mining employees mostly within the Anglo American mining group itself – where there had been a moratorium on additional employment until the completion of the Amplats review.

Amplats would do everything in its power to facilitate that process, including the opening of Teba recruitment offices at its mines to enable maximum redeployment of mining personnel to mining companies.

Once that opportunity was exhausted, the remaining employees, who ended up without an opportunity to continue to work in the mining sector, would be offered work in housing, entrepreneurship, platinum beneficiation and rural development in labour-sending areas.

These were expected to make up about two-thirds of the 14 000.

The second initiative would involve Amplats reskilling employees to enable them to obtain new jobs, in addition to receiving the retrenchment package.

Amplats was putting up a fund of R300-million to build 15 000 houses for its employees in Rustenburg as part of what it calls its anchor housing project and expected 6 000 new jobs to be created as a result.

Those workers not redeployed would be reskilled to contribute to a better social environment in Rustenburg and simultaneously provide non-mining employment.

Additional funding was also being offered to Anglo American’s Zimele small-business development company to create entrepreneurial jobs at double the normal cost per job in both the Rustenburg area and the rural areas from which Amplats sourced its labour.

“This is about creating real jobs in real projects to offset the negative affects of potential restructuring, and that’s just the target in the short term, because the projects themselves will have their own momentum,” Griffith told Mining Weekly Online.

Amplats intended partnering with the many government job-creation projects to double the number of mining jobs lost over five years.

“Those are the proposals that we’ll be putting to our unions, and they are in addition to the normal retrenchment process,” Griffith said.

Employees could thus leave Amplats with union-negotiated retrenchment payment; housing, retirement and medical allowances, plus enter reskilling programmes and be assisted in finding non-mining jobs.

Amplats was allowing R800-million for this to be implemented over a period of five years. 

Amplats executive marketing head Andrew Hinkly said that retrenched workers would also be considered for employment at the many beneficiation projects that the company had been working on for many years, which set out to add value commercially to the platinum mined.

“For example, we have an exciting project in the fuel cell area which we would anticipate could create up to 100 jobs in the near term and potentially several thousand over the five-year period. This is a high-growth sector that we continue to invest in,” Hinkly added to Mining Weekly Online.

PLATINUM REVIEW

The Amplats review proposed to deliver a R3.8-billion-a-year benefit from 2015, which included a R390-million slashing of overheads.

It would cut production by 400 000 oz/y to keep baseline production at between 2.1-million ounces and 2.3-million ounces a year compared with its previously disclosed planned growth of 3-million ounces.

The priority of the restructuring, Griffith said, was to create a platinum business for the long term, for which the business fundamentals remained strong.

However, the current operating environment was weak, with mine profitability being eroded by escalating costs and capital intensity coupled with lower grades and greater mine depths.

Difficult decisions had to be made to keep the business competitive and to support a long-term future.

The primary objective was to create a quality mine portfolio to produce platinum-group metals on an economically sustainable basis in line with the lower expectation of demand growth.

It was proposing to reduce its production profile by 400 000 oz to align the output with demand.

Rustenburg would be restructured into three operating entities, removing 250 000 oz to 300 000 oz a year of high-cost production.

Four Rustenburg shafts, Khuseleka 1 and 2 shafts and Khomanani 1 and 2 shafts, would be mothballed for the long-term.

The Rustenburg operations would become a 320 000 oz to 350 000 oz a year producer, ensuring more effective capital allocation.

As a result, Amplats would reduce its planned capital expansion over the next ten years by 25% to R100-billion in order to focus investment on low-cost, high-margin projects.

The Union mines were likely to be of greater value under different ownership and would be sold “at the right time”.

In the interim, the Union mines would be reconfigured to protect near-term value.

It was proposed that mining be stopped at the loss-making Union North declines and that the Mortimer Merensky concentrator be put on long-term care and maintenance.

Union North and South would be combined into one operation and the processing operations would be aligned with the proposed mining footprint, which might include closing the Waterval upper-group-two concentrator and the number-two smelting furnace.

Steps were also being proposed to increase the efficiency of some of the joint ventures (JVs) and to simplify the JV portfolio.

“The other platinum producers are the key beneficiaries,” Davis added in his note.

Amplats warned investors earlier this week of potential upcoming losses, in the wake of the labour unrest at its South African operations.

It expected a loss of 491c to 628c a share, down from a profit of 1 365c a share in 2011 when it published its full year-end results on February  4.

Edited by: Creamer Media Reporter

 

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Anglo American Platinum (Amplats) CEO Chris Griffith tells Mining Weekly Online’s Martin Creamer that for every mining job lost, Amplats will be setting out to create at least one non-mining job for employees that have to be retrenched for the good of the business as a whole. Camera work: Nicholas Boyd and Duane Daws. Video Editor: Darlene Creamer.
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