Loading...
See More

Amplats overhaul not a reprisal, says CEO

Jan 15 2013 10:45 Reuters

Striking Amplats mineworkers. Picture: Lucky Nxumalo/City Press

Company Data

ANGLO AMERICAN PLC [JSE:AGL]

Last traded 0
Change -5,31
% Change 0
Cumulative volume 1045262
Market cap 323.88bn

Last Updated: 24-10-2014 at 04:28. Prices are delayed by 15 minutes. Source: McGregor BFA

Anglo American Plat Ltd [JSE:AMS]

Last traded 0
Change -3,74
% Change 0
Cumulative volume 145357
Market cap 97.16bn

Last Updated: 24-10-2014 at 04:27. Prices are delayed by 15 minutes. Source: McGregor BFA

ANGLOGOLD ASHANTI LIMITED [JSE:ANG]

Last traded 0
Change -0,13
% Change 0
Cumulative volume 535203
Market cap 42.52bn

Last Updated: 24-10-2014 at 04:28. Prices are delayed by 15 minutes. Source: McGregor BFA

Related Articles

Platinum rises after Amplats move

Amplats warning as Anglo review looms

Strikes to hit Amplats full-year profit

Amplats: Production still lost

Amplats business review due in New Year

Amplats closes shafts, 14 000 jobs to go

 

London - Anglo Platinum [JSE:AMS] called on unions to act responsibly in response to a planned overhaul of the group that will cut production and close mines. 

"This is not a reprisal, for example, against the strikes at the end of last year. This process started at the beginning of 2012 and it was to address the fundamental and structural changes to our businesses that have made our operations unprofitable," Anglo Platinum CEO Chris Griffith said on a conference call.

"This not a knee-jerk reaction to unions, this is not a short-term response to an economy that may improve in a month or two's time. The company has to take these drastic and significant actions to save the company and the employment of an additional 45 000 people."

The overhaul plan is expected to cost R3.2bn, a total to be incurred in 2013, with most of that to be spent on retrenchment costs. 

The world's top platinum producer, said it will mothball two South African mines, sell another and cut 14 000 jobs in moves to restore profits that may provoke a repeat of last year's strikes when about 50 people died. 

In a long-awaited review announced on Tuesday that is seen as crucial to the flagging fortunes of Anglo American, which owns about 80% of Amplats, the platinum producer  said it aimed to cut output by around a fifth or 400,000 ounces. 

The price of platinum rose 1.6% in response, leaping past gold for the first time in 10 months.

Unions react 

Labour reaction was swift, with an Amplats labour leader threatening a strike across its South African operations if the indefinite closures, when they would be put on "care and maintenance", go ahead. 

"If they put any shaft on care and maintenance, all of the operations will go on strike. Nothing like this will be allowed," said Evans Ramogka, an Amplats labour leader in platinum belt the city of Rustenburg, which will bear the brunt of the job cuts. 

Activists brought many of South Africa's platinum and gold mines to a standstill last year in a wave of violent wildcat strikes.

The unrest was rooted in a union turf war and aggravated by income disparities within the industry and low wages for dangerous work. 

If 14 000 jobs are lost, it will represent about three percent of South Africa's mine labour force and set back  government efforts to cut unemployment from over 25%. 

The ANC is losing support among mine workers before general elections next year. The National Union of Mineworkers (NUM), a base of ANC electoral support, is rapidly losing members to the militant Association of Mineworkers and Construction Union (Amcu) and other groups. 

"As the NUM we are extremely disturbed by these job losses and we are asking workers to be united to defend their jobs," NUM General Secretary Frans Baleni told Reuters. 

Amplats said on Monday it probably fell to a full-year loss because of the 2012 strikes, which were centred on Rustenburg. 

It said two of its mines in Rustenburg, Khuseleka and Khomanani would be put on "long-term care and maintenance" - when mines are maintained so that they could be reopened in future but are not operated - because of their high costs. 

Amplats also said it would "divest the union mines at the right time - to maximise value under different ownership". Reuters reported on Monday Amplats was likely to sell union. 

Saving the company 
 

Amplats CEO Chris Griffith said on a conference call with reporters that the proposals were not a short-term response but were vital to "save the company".

"We must evolve to align the business with our expectations of the platinum market's long-term dynamics and address the structural changes that have eroded profitability over time," he said.

The proposals will have to be pushed through by new Anglo American [JSE:AGL] chief executive Mark Cutifani, who will take over from Cynthia Carroll in April.

Cutifani hailed South Africa as an investment destination as he turned around bullion producer AngloGold Ashanti [JSE:ANG] but is also a realist who will want to deliver for shareholders.

Investors applauded the moves. "It's good that they've made a good, strong first move and this will place them on a great footing to profit when the cycle does turn," said Nic Norman-Smith, chief investment officer at Lentus Asset Management in Johannesburg, which owns Amplats shares.

South Africa is home to about 80% of the world's known platinum reserves, but soaring power and labour costs and depressed prices for the metal - used in autocatalysts to lower   emissions - have conspired to make much of the industry unprofitable.

 A tipping point may have been reached last year by the illegal strikes that hit production and bottom lines.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

anglo platinum  |  mining
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
37 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

Retailers of any shape and size can now unlock the power of mobile transacting.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...