Amplats plans highlight SAs labour challenges – Fitch
JOHANNESBURG (miningweekly.com) – Anglo American Platinum’s (Amplats’) far-reaching restructuring plans have highlighted South Africa’s labour challenges in the gold and platinum industries, Fitch Ratings said on Friday.
The platinum miner’s decision to close four shafts, sell its high-cost operations and restructure some of its Rustenburg operations have revealed the growing difficulties of labour-intensive production and sharply rising wage costs.
“This mix has been a growing problem for years, but we believe cost inflation is likely to have a marked impact on mining companies' results in 2013 owing to stagnant commodity prices,” the ratings agency said in a statement.
Fitch said labour in the gold and platinum sectors accounted for about 40% of the mining costs – compared with 20% of the cost for coal and iron-ore mines – making large wage hikes difficult to absorb.
“The plans are likely to be neutral to positive for Anglo American's credit profile, given the weaker profitability of the operations being closed,” it added.
Fitch further noted that it could be expected that other companies would follow suit if Amplats successfully restructured in the face of government and union opposition.
The agency expected Amplats to face significant political pressure to reverse or water down its plans, as well as potential strike action and disruption at other facilities.
Amplats and the Department of Mineral Resources on Friday agreed to “engage positively” over the following 90 days to discuss the business review proposals and to determine how they can best work together to achieve their shared objective for the benefit of all stakeholders.
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