Trade union the National Union of Mineworkers (NUM) has condemned the decision by London-listed Petra Diamonds to place the Finch diamond mine in Kimberley under business rescue and to issue a Section 189A notice at the Cullinan diamond mine.

As reported by Mining Weekly last week, business rescue practitioners (BRPs) Daniel Theodorus van Jaarsveld and Luke Bernard Saffy have taken over the custodianship of the Finsch mine and were set to begin executing the legal requirements under the business rescue process, including the formulation of a Finsch-specific business plan that will be put forward to the creditors for voting.

Petra in May announced that it would place the mine in business rescue to protect the rest of the business. At the time, the company said it believed the business still had a viable future, given its Cullinan mine’s unique product mix.

In a June 10 update to shareholders, Petra reported that, in agreement with the BRPs, the Finsch mine has started suspending production activities from that week. “This is an interim step pending the completion of the Finsch-specific business plan by the BRPs and until the way forward has been agreed between the BRPs and the creditors," the company stated at the time.

NUM warns that the business rescue process at Finch places about 689 workers in a state of uncertainty, while the Section 189A notice at Cullinan threatens the jobs of roughly 1 090 workers.

Together, these developments place nearly 1 800 livelihoods at risk and threaten the economic stability of the mining communities that depend on these operations, the union states.

“NUM vehemently rejects any attempt to place the burden of business challenges on workers, who have continued to contribute to the profitability and sustainability of the company through their labour, sacrifice, commitment, and productivity over many years,” it points out.   

“It is unacceptable for companies to continuously point fingers at labour costs whenever they face operational or financial challenges. Workers are not a liability on a balance sheet; they are the creators of value and wealth in the mining industry. Without workers, there is no production, and there is no profit,” NUM Petra Diamonds chief negotiator Masibulele Naki avers.

Naki also mentions the union’s concern about the growing trend in the mining sector where retrenchments and business rescue processes are increasingly used as the first option rather than the last resort.

“The narrative that labour is the highest cost to the company must be challenged. Executive remuneration, management decisions, declining investment strategies, market fluctuations, and operational inefficiencies also contribute significantly to the financial position of mining companies. Workers should not be expected to pay the price for challenges they did not create,” Naki indicates.

The NUM acknowledges that the global diamond industry faces significant market pressures, including weaker consumer demand, declining rough diamond prices, increased competition from laboratory-grown diamonds and broader economic uncertainties.

However, Naki notes that these realities must be acknowledged honestly, “instead of creating an impression that workers’ wages are the primary cause of the company’s financial difficulties.”

Moreover, exchange-rate fluctuations and the volatility of the South African Rand against the US dollar significantly influence revenue streams and production costs, Naki points out.

As these economic factors are beyond the control of workers, the NUM maintains that any assessment of the future sustainability at Finch and Cullinan must objectively consider these global market conditions, commodity pricing, operational efficiencies and capital allocation decisions before jobs are sacrificed.

The union also stresses that the current crisis requires urgent intervention by government, and calls on the Minister of Mineral and Petroleum Resources, the Chief Inspector of Mines, the Minister of Electricity and Energy, the Minister of Trade, Industry and Competition and the National Treasury to urgently convene a multi-stakeholder intervention to safeguard jobs, sustain investment and secure the future of these operations.

The union further advocates for strict regulatory oversight.

NUM says it will participate fully in all consultation processes and defend the interests of workers during the processes at both operations.