World-leading platinum group, Anglo American Platinum (Amplats) has given in to political pressure, resulting in a delay in its announcement of a restructuring plan that aims to leave 6000 miners jobless.
Amplats announced its plan on Friday which included a reduced number of 6000 mine workers being retrenched instead of the 14000 initially set earlier this year. Despite the large reduction in proposed dismissals, many analysts claim the compromise is not enough to clear Amplat of its financial losses.
On Friday, the company took a heavy blow following the announcement. Many investors withdrew from the group, resulting in its share price dropping by 3.35% to close at R330.
London-based analyst, Ben Davis , in accordance with the Sunday Times newspaper, states that the company has managed not to lose face, however, its decision has added to its own difficulty in recovering lost profits.
“They tried to put a brave face on it, but essentially they have made it a lot harder on themselves to improve profitability.”
“This is by far a much worse proposal than the first one that they gave to the market,” Davis further stated. “Clearly the outcome is as a result of consultation with government which is very keen to preserve these jobs.”
Fact adds to Davis’s statement. Following their initial announcement in January, the platinum group had to revise its restructuring plan as a result of a large fuss made by the Department of Mineral Resources and many unions. Amplats had to hold discussions with employees, unions and government before making the announcement on Friday.
Understandably, labour unions are still highly displeased with the revised number of proposed dismissals despite the large compromise made by the copmany. “Job losses are job losses,” stated a National Union of Mineworkers spokesperson.
Cosatu is not excited with the proposed review either, stating: “It’s a spit in the face to the workers and the people of South Africa.”
Many Labour unions have vowed to protest against the the retrenchments which may place the country in a repeated scenario of last year’s Marikana incident. Furthermore, analysts state the battle will not be limited between Amplats and labour unions but the next few months should see disagreements between the unions themselves as one union tries to negotiate better terms than the other.
South African mine workers and investors face a tense period ahead. And the situation may be worse than it seems. According to Nomura International analyst Peter Attard, Amplats’s mine worker dismissal number of 6000 is only a figure placed to reduce government pressure and Anglo American Platinum would ultimately have to revert to its initially proposed number of 14000.
“We think ultimately this is only a politically led shift in timing of the restructuring of Amplats and the competitive dynamic is such that we will, in the long run, still end up with the same number of job losses as originally planned,” reported Attard.
Many South Africans may not fully understand that Anglo American Platinum does not simply have its own profits and losses to consider. The organisation holds a large part of the country’s political, economic and social stability in its hands and any decision taken from this point onwards is bound to send ripples across the nation.