South Africa loses over 23,000 mining jobs

Metal prices fall as demand tails off

Gold and coal mining companies are engaged in what all parties are describing as difficult wage negotiations against a backdrop of falling metal prices. Photograph: Reuters

Gold and coal mining companies are engaged in what all parties are describing as difficult wage negotiations against a backdrop of falling metal prices. Photograph: Reuters

 

Falling metal prices and lower demand internationally are behind the loss of more than 23,000 jobs in South Africa’s mining sector and subsidiary industries since April, economic development minister Ebrahim Patel said this week.

Mining house Lonmin told employees in recent weeks it planned to cut 6,000 jobs as it readies to close several mine shafts in a bid to survive plunging prices. In total, seven mining houses listed on the local JSC stock exchange have made job cuts announcements.

Official figures reveal that between April and June, 23,231 employees were given formal notices of their likely retrenchment in the next few months, with 11,901 of these in the mining sector.

‘Blood bath’

Livhuwani Mammburu

Pay-rise demands by mining unions above the rate of inflation, which accelerated to 4.7 per cent in June, are also contributing to the unemployment crisis, as companies tend to shed jobs to pay for the higher wages.

While the recent downturn has left mining, one of the country’s economic pillars, in “serious trouble,” according to Mr Patel, he insisted government had a plan to create state jobs to off-set the employment losses. “Maintenance is your biggest job driver. You create more jobs on maintenance than on new builds. So we will still strengthen the new-build programme, but the big focus will be on maintenance,” he said last Friday.

However, the loss of further mining and associated jobs in the months ahead is a significant threat, with gold and coal mining companies engaged in what all parties are describing as difficult wage negotiations.

On Tuesday, mineral resources minister Ngoako Ramatlhodi ordered Glencore mining house to suspend all operations at a coal mine because of the way it planned to carry out the retrenchment of about 500 employees.

In addition, 10 other mining houses are facing the suspension of their operational licences because they were working without a proper water use permits, he added.

Glencore maintains it has had to shed jobs because of an uneconomic coal contract it is tied to with state electricity provider Eskom. Talks between the mining houses and government to resolve the licensing issue are ongoing.

The main opposition Democratic Alliance (DA) has criticised government’s approach to the licensing issue saying its approach smells of panic, and that its actions will only lead to more job losses.

“Right now what the government should be doing is making it easier for miners to survive the tough times. It’s not going to help if they do nothing but threaten the miners and make it more difficult for them to operate because more jobs will be lost,” said DA MP James Lorimer.