JOHANNESBURG (miningweekly.com) – Mineral Resources Minister Susan Shabangu on Tuesday said her department had been blindsided by JSE-listed Anglo American Platinum’s (Amplats’) announcement that it would undertake a restructuring programme that would see 14 000 jobs lost.

She said the company only consulted with the Department of Mineral Resources (DMR) less than seven days ago, despite the major socioeconomic ramifications of its decision.

“The department regrets the behaviour by Anglo American on how the company relates and undermines the regulator on such important business decisions, which impact on the country’s economy,” the Minister told journalists at a briefing in Pretoria.

Earlier in the day, Amplats indicated that, as part of its revival programme, it would, among others, restructure its Rustenburg operations into three mines and dispose of its Union mines, which it believed would hold more value for other owners.

Shabangu said the DMR was surprised by Amplats' announcement, as the company had not adequately consulted with the department beforehand, “There was never a consultation; there was a meeting with the outgoing [Anglo American] CEO [Cynthia Carroll] about the intention of restructuring…but it was agreed that they would come to us if they had a plan before going public.”

Although the retrenchments had net been carried out yet and a 60-day consulttion process would be completed as per the Labour Relations Act, Shabangu insisted that the DMR should have been engaged throughout the preceding process.

Amplats assured that it would attempt to create new jobs through housing, infrastructure and small business development initiatives in Rustenburg to offset the number of possible job losses caused through restructuring.

However, Shabangu warned that this solution was not workable, “Looking at what has happened throughout history, in many cases where such programmes come in at the tail end, the affected people tended to get stuck in unemployment.”

She added that training people as bricklayers was not sustainable, as many qualified bricklayers in South Africa were currently unemployed, “What difference are they making if they are only adding to the number of unemployed bricklayers in the country?”

Meanwhile, Amplats also suggested reducing production at its Rustenburg operations to between 320 000 oz and 350 000 oz, while placing its unsustainable Khuseleka 1 and 2 shafts and Khomanani 1 and 2 shafts onto long-term care and maintenance.

CEO Chris Griffith indicated that this would drop the company’s production by about 400 000 oz/y with a baseline production target of 2.1-million to 2.3-million ounces a year.

The group would also consider shutting down its Waterval UG2 concentrator and No 2 smelting furnace as it aligned its processing operations to the restructured operations.

Further, mining activities at the Union North Declines would be ceased, the Union North and South shafts combined into one operation and the Mortimer Merensky concentrator would be placed on long-term care and maintenance.

Another proposal included cutting back on about 25% of capital expansion expenditure over the next ten years, falling to R100-billion, and shifting investments to low-cost, high-margin projects.

The efficiency and cost reduction initiatives were expected to deliver benefits equal to R3.8-billion, including savings of R390-million a year from optimising its overhead structure.

Shabangu also expressed concern over the extent of Amplats’ compliance with regulatory requirements on besides others, establishment of future forums in terms of Section 52 of the Mineral and Petroleum Resources Development Act (MPRDA) that relates to downscaling and large-scale retrenchments.

“This failure resulted in the inability to achieve the primary objective of the social plan to avoid job losses and for the affected to foresee this eventually,” the Minister highlighted, adding that Amplats’ announcement failed to mention whether the company had considered mine health and safety and environmental management plans that would be implemented during the care and maintenance period of the named operations, as well as the associated social impact.

Shabangu went on to say that her department would launch an investigation into the patterns of capital investments Amplats made towards the Rustenburg assets for long-term sustainability and optimal exploration of mineral resources.

“The conduct of Anglo American Platinum also suggests the company’s half-hearted commitment to meaningful transformation and undermines on the key objects of the MPRDA, which investigates the sustainable and optimal exploration of mineral resources,” the Minister indicated.

She said Amplats was also contravening the conditions outlined in its old-order mining rights that were granted to it by the DMR in 2010, which were valid for 30 years based on a mining programme that called for uninterrupted and optimal exploration.

Shabangu stated that the DMR would subject Amplats’ parent company Anglo American’s portfolio of mining rights to regulatory scrutiny to ensure compliance.