Fury at Anglo American Platinum's plan to close mines

http://www.guardian.co.uk/business/2013/jan/15/anglo-american-platinum-closes-mines

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Mining union leaders threatened new strikes on Tuesday when Anglo American Platinum (Amplats), the world's biggest platinum producer, said it plans to mothball two South African mines, sell another and cut 14,000 jobs.

Government reaction was also swift, with a minister saying it had not been consulted and pouring scorn on the company's pledge to create replacement jobs elsewhere.

The closures and sell-off are seen as crucial to reviving the 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.

Industrial action last year escalated swiftly into violence, which resulted in about 50 deaths. They included 34 striking miners at platinum producer Lonmin who were shot dead by police in August in the deadliest security incident since the end of apartheid in 1994.

"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, labour leader in Rustenburg, centre of last year's strikes and where most of the cuts will fall. Last year's strikes brought many of South Africa's platinum and gold mines to a standstill. 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 3% of South Africa's mineworkers and set back government efforts to cut unemployment from more than 25%.

South Africa's mines minister Susan Shabangu contradicted Amplats' claims that it had spoken to the government. "There was never a consultation. They've come up with their own plan, finalised their plan and told us," she said. The company had betrayed the trust built up between management and ministers by presenting the government with a fait accompli, she said. "When the horse has bolted, then they come to us? Is that how it is going to work?"

Amplats said it would aim to replace the jobs through supporting housing and small business initiatives in Rustenburg, but Shabangu asked: "Fourteen thousand jobs? In which sector? Bricklaying?"

The price of platinum rose more than 2% to a three-month high after Amplats' announcement, passing gold for the first time since March last year, on concerns over supplies coming from South Africa, home to 80% of known platinum reserves.

Platinum's labour-intensive nature has intensified the problems for Amplats which faces rising wages, power and input costs as demand sagged for a metal used in diesel cars that is largely dependent on Europe's sluggish market.

In 2006, platinum contributed 24% of Anglo's group operating profit, but by the first half of last year safety stoppages and weaker prices left platinum accounting for just 2% of group profit.

Amplats chief executive Chris Griffith said 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 the new Anglo American chief executive Mark Cutifani, who will take over from Cynthia Carroll in April.