Plan agreed to stem job loses in South Africa’s mining industry

Government, mining companies and unions reach agreement after weeks of negotiations to stabilise the industry

Boys play soccer in Marikana’s Nkaneng township in front of the Lonmin’s Marikana platinum mine in Rustenburg, South Africa. Photograph: Reuters

Boys play soccer in Marikana’s Nkaneng township in front of the Lonmin’s Marikana platinum mine in Rustenburg, South Africa. Photograph: Reuters

 

A new plan designed to stem the loss of thousands of jobs in South Africa’s mining industry was agreed on Monday by government, mining companies and unions after weeks of negotiations to stabilise the industry.

Falling commodity prices and escalating costs, including above inflation wage demands from unions, has left one of the pillars of the South African economy in serious trouble in recent months.

In response to the difficulties, mining houses appeared intent on closing unprofitable mines and axing jobs to cut costs. But, after a call by government for everyone in the industry to pull together, it seems a breakthrough in the negotiations was secured.

The new plan involves a series of interventions that include boosting the platinum sector by promoting the metal as a central bank reserve asset, and the government committing to establish a fund to assist financially in retraining retrenched mineworkers.

Also part of the plan are commitments by companies to delay lay-offs and to sell distressed mining assets instead of closing them to save the jobs linked to the operations. For their part, unions agreed to increase productivity.

At a press conference in Pretoria, mines minister Ngoako Ramatlhodi said around 19,000 jobs were on the line and that saving as many of these as possible was the priority of everyone concerned.

In relation to the platinum intervention, Mr Ramatlhodi said the government planned to negotiate the details with the South African Reserve Bank and the new development bank launched recently by the Brics group of emerging economies.

“I hope we can reach a point where it says ‘I promise to pay the bearer in platinum equivalent’ to add to the basket, so we are looking at internal promotion,” he said.

Close to 80 per cent of the world’s known reserves of platinum, a metal used in emissions-capping catalytic converters, is found in South Africa. However, demand is depressed at the moment, with the price of the commodity hovering around $1,000 an ounce.

South Africa’s four main mining unions have agreed to the deal, which the Chamber of Mines vice-president Andile Sangqu said would hopefully “restore confidence in the industry”.

The development will likely be used as an example of solidarity to other sectors across the country also facing hardship. President Jacob Zuma warned on Sunday the economy was “sick” and appealed to business and the unions to prioritise saving jobs over profit margins and wage hikes.

However, ArcelorMittal South Africa announced on Monday that, due to weak demand and lower prices, it is planning to shut two steel mills and is reviewing operations at its largest plant. About 400 jobs are on the line.