UPDATE: 14,000 jobs affected as Amplats restructures Rustenburg

The platinum miner hopes to extract R3.8bn in cost savings and create 14,000 new jobs through the plan.

Author: Geoff Candy
Posted: Tuesday , 15 Jan 2013


Anglo American Platinum said Tuesday it will, among other things, reconfigure its Rustenburg operations into three mines, sell its Union mine and deliver R3.8bn in cost savings by 2015.

These plans are all the result of a review of its operations undertaken by its parent Anglo American in a bid to return the company to long-term profitability and are expected to affect as many as 14,000 jobs, 13,000 of which will be in the Rustenburg area.

According to a release out on Tuesday morning, the group said, it would restructure its Rustenburg operations into a sustainable 320-350,000oz platinum producer across three operating mines.

As a result, “Four unsustainable, high-cost shafts, namely Khuseleka 1 and 2 and Khomanani 1 and 2, will be put on long-term care and maintenance.” This it says will see the production profile reduced by approximately 400,000oz per annum with a baseline production target of 2.1 – 2.3 million oz per annum.

The group said, this may also impact the Rustenburg processing operations which could include the closure of the Waterval UG2 Concentrator and No. 2 Smelting Furnace.

The second major change, Anglo American Platinum has planned is the divestiture of its Union mine, “at the right time”.

The group says, the Union Mines “are likely to be of greater value under different ownership, particularly in comparison to the other attractive growth options in the Company’s portfolio, and it therefore proposes to divest Union at the right time.

Until, a buyer has been found, the group says, it will halt “mining activities at the Union North Declines, combining Union North and South Shafts into one operation and putting the Mortimer Merensky concentrator on long-term care and maintenance.

The proposed plan, which CEO, Chris Griffith was at pains to point out was the result of a studied review, not just of Anglo American Platinum but of the sector as a whole, rather than a knee-jerk reaction to the strikes seen toward the end of last year, is expected to cost the group around R3.2bn in 2013.

Of this figure, potential retrenchment costs account for up to R1.2bn, while the social mitigation costs associated with the retrenchments would be R470m.

The ongoing care and maintenance of the shafts that are being shut is to cost approximately R100 million per year beyond 2013 and, the group anticipates the potential for further social mitigation cost of R400 million post-2013.

The restructuring of joint venture operations has also been reviewed in order to optimise long-term profitability and competitiveness. This may include rationalisation of farm boundaries to optimise life-of-mine extensions and other commercial considerations,” it says.

According to the platinum miner the restructuring will allow for more effective allocation of capital but, nonetheless, intends to reduce its planned capital expansion expenditure over the next 10 years by approximately 25% to R100 billion in a bid to “focus investment on low-cost, high-margin projects.”

Amplats hopes these changes will result in a R3.8bn boost to the company by 2015, including savings of R390m from the redesign of the group’s “overhead structure.”

While the restructuring is expected to have a massive effect on jobs, Amplats says it continue to take its social responsibilities seriously, “and proposes to provide a comprehensive package of support to any affected employees and communities. In particular, the Company will target the creation of at least 14,000 jobs – an equivalent number of jobs to those that may be affected by the restructuring.”

“The job creation initiatives will focus on housing, infrastructure and small business development in Rustenburg and the labour-sending areas,” the group said.

According to Griffith, the plan is to be as employment neutral as possible.”

With a particular focus on the macroeconomic linkages between the commodities sector and the broader economy, Geoff is the host of Mineweb’s podcast series and the site’s Director of Content and European Editor.

Email: geoff@mineweb.com

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