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The announcement by AngloGold Ashanti [JSE:ANG] that it is reviewing the possible sale of its remaining mining operations in South Africa, not only prejudices job security, but would cause major uncertainty among employees, directly impacting employee morale, according to Gideon du Plessis, general secretary of the union Solidarity.
Du Plessis says it is disappointing that AngloGold Ashanti has identified better growth opportunities outside SA. Solidarity is, however, not surprised by the announcement of the review.
Such a sale of remaining SA operations by AngloGold would include its Mponeng mine, the company's only remaining mine in SA. Du Plessis told Fin24 on Thursday that the union has just over 1 000 members working at the mine - mainly skilled workers.
"AngloGold has been streamlining its business at the mine and at its head office. They are making it fit for purpose to put it on the market, in my view," said Du Plessis.
He added that the usual explanation AngloGold has given the union in the past was that the company must compare the return on investment it would get in SA to investing the same amount of capital somewhere else.
"In the past, each time we put it to AngloGold that their decisions are linked to the Mining Charter and political uncertainty in SA, they would deny it and say it is purely commercial in nature," said Du Plessis.
According to Du Plessis, the union was briefed by AngloGold CEO Kelvin Dushnisky on Monday.
Institutional knowledge
"He said it does not make financial sense to move the head office. He also said one thing that impressed him a lot in SA was the institutional knowledge and skilled mining specialists at the company in SA," said Du Plessis.
"I know there cannot be a guarantee of no job losses if they decide to sell the mine, but the way they have made the staff complement fit for purpose, means it would be ready for whoever takes over. The same goes for its head office."
Du Plessis expressed the hope that, should AngloGold decide to sell the mine, the new owner would have "the necessary track record, expertise and capital to successfully manage the mine".
AngloGold said in a statement issued on Thursday that there is always an ongoing review of its portfolio and a disciplined approach to allocation of capital and other resources to ensure it generates maximum value for all its stakeholders.
Lifespan
The completion of the company's restructuring in SA over the last few years has resulted in this portfolio comprising a single underground mine, Mponeng, a surface rock dump processing business and a mine waste retreatment operation, Mine Waste Solutions.
According to AngloGold, the Mponeng mine currently has a lifespan of about eight years. In about two years, the mine would require additional capital investment to further extend its life and to realise the full potential of this operation.
In the view of Solidarity, the mine could potentially have a remaining lifespan of 37 years or more.
"The investment to extend Mponeng’s life beyond eight years has very strong competition for capital and other scarce resources from a host of other projects in our portfolio, which at current planning assumptions are more attractive, generating higher returns and quicker payback periods - we have therefore decided to review divestment options for our South African business," Dushnisky said in a statement.
He added that the process is at an early stage and may not ultimately result in any change to the ownership of the South African business.
According to the statement, AngloGold's priority is to ensure that the process is conducted "with the appropriate thoroughness to ensure the best possible outcome for all stakeholders."
By early afternoon on Thursday, AngloGold's share price was up 1.09% to R173.07 per share.
