South Africa's mines, which were the bedrock of the country's industrial growth long after apartheid, have cut thousands of jobs and slashed tax payments, hurting the country's economic outlook just months before a crucial election. Painting mud.
The country's biggest mining investor is scrapping plans to spend billions of rands on new projects in response to a myriad of local challenges and weak profits due to falling commodity prices such as platinum.
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The layoffs and investment cuts come against a backdrop of high unemployment and weak economic growth, and cast a heavy shadow over a parliamentary vote scheduled for May, with the ruling African National Congress (ANC) making a decision for the first time this year. It is likely to lose its parliamentary majority. 30 years.
Rising commodity prices such as palladium, rhodium, coal and iron ore in recent years have led to windfall profits for Anglo American Platinum, Sibanye Stillwater, Kumba Iron Ore and Exalo Resources, with domestic companies such as: We were able to partially overcome the constraints. Power outages, poor rail networks, and crime.
“Marginal industries and marginal employment”
But with prices plummeting since last year, companies are in restructuring mode and cutting jobs.
said Claude Baissac, CEO of Eunomix Research.
“Unless there is a fundamental change in policy and state capacity, we will end up with a marginal mining industry that provides marginal jobs.”
The mining sector contributed 6.2% to South Africa's gross domestic product last year, up from 7.3% in 2022 and 8.3% a decade ago, according to industry lobbying group the Minerals Council of South Africa. The sector employs approximately 477,000 people.
deficit
Anglo American's South African platinum and iron ore division this week announced plans to review contracts with 780 contractors, along with more than 4,000 job cuts.
The restructuring includes deferring spending plans at some platinum shafts and closing metal processing plants, and is aimed at saving Anglo R13 billion.
Read: Kumba Iron Ore considers job cuts
About 15 of South Africa's largest mining companies, including Amplats, Kumba and Glencore, contributed R110 billion in taxes and royalties in 2021, according to analysts at Morgan Stanley. This represents the bulk of the approximately R360 billion in corporate tax collected.
Analysts expect that amount to halve by 2023.
Sibanye, the largest employer in South Africa's mining sector, plans to cut around 4,000 jobs at its platinum mines. Smaller platinum producers and some coal producers also announced job cuts.
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read:
Sibanye: Restructuring and closures could affect more than 4,000 jobs [Oct 2023]
Sibanye cuts 2,600 jobs at SA platinum mine [Feb 2024]
About half of the country's platinum mines, some of which are the world's deepest and costliest to operate, are unprofitable at current prices, said Impala Platinum spokesman Johan Theron.
“So if nothing changes (in terms of prices), over 50% of the industry will disappear in some way over time,” he said. “Anything that fundamentally creates a loss is not sustainable.”
Impala has said there may be layoffs and last year asked workers to submit to voluntary severance packages.
read:
Impala Platinum begins voluntary job cuts at SA mine [Nov 2023]
Amplats considers cutting 3,700 jobs due to low metal prices [Feb 2024]
railway crisis
South Africa's coal exports in 2023 will be at their lowest level since 1992, due to the dire state of the rail network run by state-owned company Transnet, hampered by shortages of wagons and spare parts, cable theft and inadequate maintenance. became. For a while, companies stockpiled goods in hopes that the situation would improve, but in recent days they have scaled back production and cut jobs to cushion losses..
Read: South African coal exports fall to 1992 levels due to rail disruption
Anglo American's Kumba, Africa's largest iron ore miner, will reduce mining output over the next three years until rail transport capacity improves, CEO Mpumi Zikalala said on Tuesday. As of December, Kumba stockpiled about 7 million tons of raw materials for steelmaking at its mines.
Read/Listen: Transnet problems force Kumba to lay off workers
The National Union of Mineworkers, one of South Africa's largest and most powerful trade unions, said: “Unless there is an immediate solution to the power crisis and rail and port infrastructure challenges, we will clearly continue to lose jobs.” Stated.Formerly led by Cyril Ramaphosa