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Time benefit possible in ‘constructive’ Govt/Anglo talks

15th February 2013

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – With two legal processes taking place in parallel, there might be a time advantage in Anglo American Platinum’s (Amplats’) current in-depth, ongoing consultation process with government and labour, Amplats CEO Chris Griffith said on Friday.

Answering analysts' questions on fears that the timeline would extend out beyond April, Griffith said that the multi-department consultation under way was allowing two legal processes to run at the same time.

Anglo American has reported a 44% decrease in underlying operating profit to $6.2-billion in the year to December 31.

Griffith said that the two obligatory legal processes that were running in parallel were the 60-day Section 189 retrenchment process, dealt with by the Department of Labour, and the procedure under Section 52 of the Minerals and Petroleum Resources Development Act, which was overseen by the Department Mineral Resources.

Amplats’ restructuring plan is to close two mines, suspend four shafts and retrench 14 000 people.

“We’re not unhappy with the consultation we’re seeing now,” Griffith said, adding that representatives of the Department of Mineral Resources and labour unions had been made privy to in-depth company information in presentations spanning days.

“The feedback has been that these have been constructive,” he said.

“We’ve done what we believe is the right thing,” Anglo American CEO Cynthia Carroll said.

“The government did react in different ways. We heard different voices from around the government alliance, but I think they have understood now that we’re all in this together.

“The only way to overcome the situation is to make sure that anybody who is impacted by the restructuring has a place to go – and that’s our commitment,” Carroll said.

Ultimately, what the company was trying to do was to ensure that the remaining 45 000 jobs endured for the long term.

“We’ve got to make sure that all Ministries that can help are involved; Higher Education, Labour, Minerals and the Ministry of Finance. Everybody needs to be together on this and that’s what we are striving for,” Carroll added.

Anglo American South Africa head Khanyisile Kweyama made the point that fuller understanding would result in closer alignment when it came to arriving at solutions.

Kweyama said that government departments such as National Treasury and the Department of Trade and Industry were also coming together to be part of the solution.

Many of those retrenched would be offered positions in the rest of the Anglo American group and the rest would be upskilled for non-mining jobs.

Deutsche Bank mining analyst Anna Mulholland asked what other option Anglo American had if the Amplats review could not be implemented in the full way intended.

Griffith replied it was not really all that important for the platinum review to be delivered in the exact way that Amplats had laid it out.

“What we want to do is improve the profitability of our operations and do something about the over-supplied nature of the platinum industry,” he said.

“We’re pretty confident that we’ll get there, but it may not necessarily be in the form that we’ve communicated publicly in detail,” Carroll added.

She had told journalists earlier that lower commodity prices had taken  $3.9-billion off Anglo American’s underlying profit in the 12 months to December 31 and that South Africa’s illegal strike had hit the company’s bottom line; platinum suffered an 8% decrease in equivalent refined production.

The diversified major’s earnings before interest, taxes, depreciation and amortisation were down 35% to $8.7-billion, with underlying earnings decreasing to $2.8-billion, despite having delivered record volumes of 24% more metallurgical, record production of 43.1-million tons of 4%-more iron-ore and record volumes of export thermal coal, nickel and phosphates. Copper was also up 10%.

She warned that the mining industry continued to face significant hurdles, with prices down and mining inflation continuing to run above the consumer price index, creating cost pressures across the full spectrum of businesses

Edited by Creamer Media Reporter

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