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ALERT: Charter warning as AngloGold starts retrenching 8 500 workers

Jun 28 2017 14:46
Adiel Ismail


Company Data

ANGLOGOLD ASHANTI LIMITED [JSE:ANG]

Last traded 302
Change 3
% Change 1
Cumulative volume 2135992
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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UPDATE: This article has been updated with comment from the department of mineral resources.

Cape Town - AngloGold Ashanti [JSE:ANG] is embarking on retrenchments that could see 8 500 workers lose their jobs, a move seen as the first of many to hit the mining industry as a consequence of the Mining Charter.

The mining company said the retrenchments is part of a restructuring certain of its business units, following a review to turn around the performance of these loss-making operations.

"This is a difficult decision which follows a period of significant and - ultimately - unsustainable losses, and also the evaluation of the options available to return our South African business to profitability," said AngloGold Ashanti chief executive officer Srinivasan Venkatakrishnan.

AngloGold's share price was down -4.45% at R132.00.

Trade union Solidarity confirmed on Wednesday that its members have received retrenchment notices.

It warned that this round of job shedding could be the beginning of a trend in retrenchments in the mining sector due to the negative impact of the Mining Charter.

However, the department of mineral resources disputed this. Responding to Fin24 on Twitter, it said Mineral Resources Minister Mosebenzi Zwane spoke to Venkatakrishnan, who assured him that the retrenchments are not linked to the Charter.

Jobs in the sector are important, said the department, adding that it is critical that any news on potential retrenchments be undertaken with due consideration and sensitivity.

"The Minister will meet with the AngloGold CEO on Friday to be briefed on all the issues."

The Chamber of Mines, which represents 90% of the industry, applied for an urgent court interdict to stop the implementation of the Charter.

READ: Chamber of Mines lodges urgent interdict against Charter

The charter has been criticised because of a lack of consultation between the government and other stakeholders, including labour and the mining industry itself.

“The lack of meaningful engagement with the industry, and collective engagement with all stakeholders, has been most disappointing,” said Chamber of Mines president Mxolisi Mgojo.  

Key aspects of the Mining Charter include an increase in black economic empowerment shareholding of all mines from a previous 26% to 30%. In addition, 50% of all board members and executive management must be black while 70% of all mining goods and 80% of all services in the mining industry must be procured from BEE entities.

New mining rights are subject to a 1% revenue payment to BEE shareholders prior to any shareholder distribution. Mining companies will have only 12 months to comply with the new charter's objectives.

"In their current form the Mining Charter objectives will incur significant additional costs for new and existing mining with dire consequences for investment and job creation," said Overberg Asset Management in this week's overview of the economic landscape.

"Due to the absence of a consultative process and its considerable ambiguity, the charter is likely to be stuck in the law courts for years."

READ: Mining Charter: Hope of a 'different' final version

However, the asset management firm is hopeful that the final version will be very different.

According to Connie Prinsloo, deputy general secretary of the mining industry at Solidarity, AngloGold Ashanti's announcement is especially worrying since the firm already cut almost 990 jobs during a previous retrenchment process.

“The trade union will now intensively engage with the management of AGA with the aim of finding solutions to retain as many jobs as possible at the mine. Solidarity will of course be pleased with every job that can possibly be saved,” said Prinsloo.

“However, the 189 process as set out in the Labour Relations Act must begin first, whereafter Solidarity will be able to act in the best interests of its members."

Prinsloo explained that the Commission for Conciliation, Mediation and Arbitration will now appoint a commissioner as facilitator, after which the process will commence. More information will be available then.

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