Anglo American Platinum (Amplats), the giant in the platinum group metals (PGMs) mining sector, announced on Monday its plans to cut thousands of jobs. This decision comes in the wake of a staggering 71% profit decline last year, prompting the company to embark on a major restructuring effort.
Approximately 3,700 employees, constituting 17% of the workforce, face the risk of job loss as Amplats aims to tighten its belt in response to plummeting PGM prices. Additionally, the company is reviewing contracts with 620 contractors and service providers in a bid to further reduce operating costs.
The mining sector, particularly PGM miners in South Africa, finds itself in a predicament as a sudden downturn in metal prices forces companies to rethink their operational strategies. Last year saw palladium prices dropping by 37% following a record high triggered by geopolitical tensions. Similarly, rhodium prices plummeted, from near $30,000 an ounce in 2021 to $4,365 an ounce, reflecting the volatile nature of the market.
Craig Miller, CEO of Amplats, emphasized the gravity of the decision to restructure, acknowledging the significant socio-economic impact such moves could have on employees and their communities. “This decision was not taken lightly. It is very much a last resort, given the employment challenges in South Africa,” Miller stated, highlighting the company’s awareness of the broader implications of job cuts.
The drastic drop in profit from 48.8 billion rand the previous year to 14 billion rand in the year ended December 31 has forced Amplats to slash its dividend by 81% to 21.30 rand per share, signaling tough times ahead for the company and its stakeholders.
Amidst these challenges, there is a call for alternative solutions to mitigate the impact on workers. Livhuwani Mammburu, spokesperson for the National Union of Mineworkers, advocated for the sale of loss-making shafts as a viable option to prevent the large-scale job cuts. “We are going to engage Amplats and explore all possible avenues to avoid retrenchment,” Mammburu said, expressing the union’s commitment to protecting workers’ livelihoods.
The broader Anglo American group is also feeling the pressure, with CEO Duncan Wanblad revealing plans for significant cost reductions if market conditions fail to improve. This includes postponing projects at the Amandelbult complex, where a majority of the affected jobs are located, and placing the Mortimer smelter on care and maintenance to save around 3.5 billion rand over the next three years.
Amplats’ efforts to drive efficiencies and adapt to the changing market will be critical in navigating the difficult months ahead. With a target of achieving 10 billion rand in savings this year through cost reductions and postponed expansions, Amplats is at a crossroads, balancing economic sustainability with social responsibility.
