Business
South Africa: AMPLATS to sell strike-hit mines
South African platinum miners at work. PHOTO/File
World number-one platinum producer Anglo American Platinum (AMPLATS) is to sell a swathe of its most labor-intensive South African mines after a 5-month strike shattered its hopes of ever making them profitable.
The mines account for over half of the company’s labor force but only a quarter of production and their viability was dealt a blow when miners won pay increases of up to 20 percent. AMPLATS said it would now focus on its more mechanized mines.
For the miners who faced hardship in their campaign for better pay, a sale could increase the risk of future lay-offs.
The buyers are likely to be companies with an existing focus on deep-level, labor-intensive mines, which may have more appetite than AMPLATS for the challenge of making them commercially viable.
One of the biggest hurdles will be stiff opposition to any job cuts from union leaders and politicians. Sensing potential conflict ahead, South Africa’s National Union of Mineworkers (NUM) condemned the plan to sell the mines.
AMPLATS said it would sell its Union mine, its operations at Rustenburg and South African joint venture Pandora, calling them “good long-life assets”. AMPLATS’ Rustenburg operations employ around 20,000 people while Union has about 7,000, representing over half of the company’s head count.
Some analysts have said the five Rustenburg mines and the Union mine could be worth between US$1 billion and US$2 billion.
AMPLATS parent Anglo American had already signaled its intention to reduce its troubled platinum portfolio. The sale suggests Anglo American has little appetite for a long and costly campaign to make the generally older South African platinum mines more efficient.
The platinum mining industry has been struggling in the face of depressed prices for the precious metal, used for emissions-capping catalytic converters in automobiles. A buyer would inherit a three-year wage agreement with the hard-line Association of Mineworkers and Construction Union union (AMCU).
AMPLATS has revealed that it lost over 420,000 ounces to the strike, which also affected rivals Impala Platinum and Lonmin; in addition its first-half headline earnings had dropped to 60 cents per share, a fall of almost 90 percent which it had flagged in advance.
Source: Reuters