JOHANNESBURG (miningweekly.com) – JSE-listed Kumba Iron Ore will soon start with a large-scale restructuring process at its Sishen and Kolomela mines, trade union Solidarity said on Thursday.

The union had been invited to participate in the consultation process on the restructuring of Kumba’s support divisions.

Kumba communications specialist Ghrethna Kruger told Mining Weekly Online in an email interview that ongoing challenging market conditions within the iron-ore industry, combined with a tough operating environment and high input costs, led to the proposed new organisational structure for its support functions at Sishen and Kolomela, as well as stay-in-business (SIB) projects.

Kruger noted that about 21% of employees could be retrenched, with Solidarity energy industry head Deon Reyneke stating that around 190 employees would be affected by the process, including 151 employees at the company’s Sishen mine.

He said Solidarity was concerned about the high incidence of retrenchments in the mining industry.

For this reason, the trade union would encourage Kumba to consider other alternatives.

“It seems that, as the economy deteriorates, companies increasingly want to reduce staff. Our goal is to come up with workable solutions that will get the company back on a path of profitability without any employee having to lose his or her job,” Reyneke pointed out.

Solidarity would participate in the consultation process, which would be led by the Commission for Conciliation, Mediation and Arbitration. The National Union of Mineworkers and the Association of Mineworkers and Construction Union were also expected to participate in the process.

Kruger highlighted that Kumba was facing a number of challenges, including record growth in global iron-ore production, mainly from Australia and Brazil, combined with slower demand growth from China. “[This] resulted in oversupply of iron-ore, which has put downward pressure on iron-ore prices – currently at a five-year low,” she said.

The price of iron-ore dropped almost 50% in 2014, from $134/t in January 2014 to $72/t in December 2014.

“Prices have continued to decline in 2015 and reached a low of $44/t this month,” she said, adding that the iron-ore price was not expected to recover to its previous heights with the pressure on prices likely to continue for the foreseeable future.

“Despite challenging and difficult times, Kumba is committed to supporting its staff and treating them and the communities in which we operate with care and respect, mindful of the sensitivity the situation demands.

“Guided by global best practice, Kumba will strive to conclude these processes as soon as possible in line with the requisite statutory codes,” Kruger said.