Off The Wire
UPDATE 2-South African platinum miner Implats says to slash 13,400 jobs
* Biggest round of mine job cuts in living memory
* Conventional South African mines losing money
* Lay-offs in past have stoked labour, social unrest
JOHANNESBURG, Aug 2 (Reuters) - Platinum producer Impala Platinum will slash about a third of its workforce over two years in one of the biggest rounds of job cuts by one mining company in living memory in South Africa as the platinum industry faces a day of reckoning.
The number of platinum miners employed in the world's largest producer of the precious metal has fallen from a peak of almost 200,000 in 2008 to 175,000 in the face of depressed prices and soaring costs, fuelling labour and social unrest.
Implats' planned lay-offs announced on Thursday are focused on its labour-intensive, conventional Rustenburg operations, where the number of shafts will be reduced to six from 11 with production cut to 520,000 ounces per annum from 750,000 ounces.
Its shares were around 4 percent higher at midday after earlier rising 6 percent, reflecting investor support for the tough moves.
The company clarified that the number of planned job cuts was 13,400, not the 13,000 specified in its statement earlier, which it said was a rounded figure.
The number of jobs on the line over two years, out of a workforce of about 40,000, is even steeper than plans by miner Sibanye-Stillwater to cut 12,600 at Lonmin over three years.
Most of South Africa’s conventional platinum shafts are losing money, according to the Minerals Council South Africa, while the handful of mechanised ones are profitable. But an unforgiving geology makes mechanisation challenging in South Africa and is not an option at Rustenburg.
"The only option for conventional producers today is to fundamentally restructure loss-making operations to address cash-burn and create lower-cost, profitable businesses that are able to sustain operations and employment in a lower metal price environment," Chief Executive Nico Muller said.
The company narrowed its first-half loss in March by 70 percent to 21 cents per share and warned then that steep cost cuts were on the horizon as it reviewed Rustenburg, which has been a flashpoint of labour violence in the past. The company has not made a profit in six years.
Muller told journalists an alternative would be to sell shafts it plans to close if buyers could be found, but that would not be easy.
Sibanye-Stillwater is in the process of acquiring Lonmin's nearby operations but is unlikely to have the appetite for further acquisitions as it grapples with the fall-out from a spate of deaths at its gold mines.
Job cuts are politically sensitive in South Africa, where data this week showed the unemployment rate rose to 27.2 percent in the second quarter from 26.7 percent in the first quarter.
And the typical South African mine worker has around eight dependants, multiplying the social hardships associated with lay-offs in an economy still defined by glaring racial income disparities. Black workers will account for the vast majority of the job cuts.
AMCU, the majority union at Implats, was not immediately available for comment. The union led a five-month strike in 2014 at the operations of the world's three largest platinum miners, including Implats.
"We are very concerned about the social implications," Muller said.
He said an initial 1,500 jobs will be cut in the first round, confirming a Reuters report on Wednesday. < South African platinum miners manage to maintain production despite job cuts >
(Additional reporting by Zandi Shabalala in London Editing by Alexander Winning and Emelia Sithole-Matarise)