Amidst economic challenges and plummeting prices of platinum-group metals, Anglo American, a major mining company in South Africa, is contemplating significant job cuts within its units in the country. This prospective decision, still under discussion, has drawn attention from government officials who have urged the company to postpone any layoffs until after the upcoming elections, expected to occur around May.
Confidential sources revealed that Anglo American has engaged in talks with government representatives regarding the potential downsizing of its workforce. The discussions, which remain undisclosed to the public, have prompted senior government figures to appeal for a postponement of job cuts until after the electoral period.
According to reports, the Congress of South African Trade Unions (COSATU) confirmed that Anglo American has also communicated with one of its affiliates, the National Union of Mineworkers (NUM), about the possible impending job reductions.
The proposed job cuts come as a significant concern, not only for the affected employees but also for President Cyril Ramaphosa and the ruling African National Congress (ANC) in the run-up to the elections. Anglo American is already amidst a global restructuring plan that includes substantial reductions in corporate and head office roles, a substantial portion of which are located in South Africa.
The mining giant’s financial performance has been impacted by China’s economic slowdown, resulting in a considerable drop in first-half profits. Anglo American Platinum, a majority-owned subsidiary by the London-based Anglo, faces a 14% decline in platinum prices and a substantial 41% decrease in palladium prices this year. Similarly, Sibanye Stillwater, a competitor, had announced in October the potential dismissal of over 4,000 platinum workers.
Furthermore, Kumba Iron Ore, a subsidiary of Anglo and the owner of South Africa’s largest iron ore mine, reported a 12% drop in third-quarter iron ore sales, primarily attributed to the underperformance of state-owned ports and the freight rail company, Transnet. The lack of sufficient storage space for mined ore compounded with rail transportation issues has exacerbated the situation, according to insider sources.
In response to queries, Anglo American acknowledged the challenging operating conditions, citing macroeconomic factors and specific constraints within South Africa. However, the company refrained from divulging details of ongoing discussions but emphasized its collaboration with both the business sector and the government to address these challenges.
The final decision regarding job cuts and the exact number of affected positions remains pending. Still, insiders suggest that potential layoffs might impact Anglo American Platinum first, while those within Kumba may face deferment to a later stage.
The Department of Mineral Resources did not provide any comments, and efforts to reach Gwede Mantashe, the Minister of Minerals and Energy and the ANC’s chairman, for a response proved unsuccessful.
The decline in prices for platinum-group metals is attributed to global economic conditions, particularly the slower-than-anticipated recovery in China. Kumba’s challenges directly correlate with the inadequate performance of Transnet, which has not only affected iron ore transportation but has also initiated talks on job cuts within coal companies like Seriti Resources Holdings and Glencore.
Reports presented to President Ramaphosa’s office highlight a decade-low in iron ore transportation to ports due to the rail performance dip, while coal shipments via rail have hit a 30-year low.
In a production report, Kumba emphasized their increased focus on cost optimization and logistical efficiency due to ongoing rail and port challenges, noting a substantial increase in iron ore stockpile compared to the previous year.
The looming prospect of job cuts within Anglo American’s South African units, coupled with broader economic challenges, underscores the complexity of the situation and its potential implications, especially in the lead-up to the forthcoming elections in South Africa.