South Africa’s mining industry has shed more than 35,000 jobs in two years as it has been battered by labour unrest, rising costs and weak commodity prices.
The scale of the job losses – equivalent to one out of 14 workers in the sector – indicates how the labour unrest that has plagued the industry since the police shooting of 34 striking miners at Marikana in 2012 has accelerated restructuring in the sector.
Mining is one of the biggest private sector employers in South Africa and the new data from the Chamber of Mines – seen by the Financial Times – provide the first detailed analysis of the extent of job losses since the shooting.
The majority of the losses between 2012 and last year occurred in gold and platinum, with those sectors’ workforces shrinking by about 23,100 and 10,800 respectively, according to the chamber. These amount to labour reductions of 16 per cent and 5 per cent respectively.
A further 1,600 jobs – or 7 per cent of the workforce – have been cut in iron ore mining between 2012 and last year.
“Work stoppages, which reduce mining volumes, reduce profitability,” said Monique Mathys, economist at the chamber. “Reduced profitability results in companies needing to restructure, and to look at modernisation options that improve profitability and ensure sustainability of the operations.”
Ngoako Ramatlhodi, South Africa’s mines minister, said this month that the government was “alarmed at the rate at which retrenchments have been taking place in the industry”.
South Africa hosts large operations of groups such as Anglo American, Glencore and AngloGold Ashanti, and is endowed with a wide range of mineral resources ranging from coal to manganese.
It is home to about 80 per cent of the world’s proven platinum reserves and in the 1970s it accounted for more than two-thirds of the planet’s gold production.
South Africa is still ranked the fifth largest gold producer. But the sector has been in decline since the 1990s, during which time the number of people emplooyed across the mining industry plummeted from about 800,000 to below 500,000.
Platinum miners, meanwhile, overexpanded during the commodities super cycle in the 2000s and have since been hit by prolonged weak prices and spiralling costs.
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>Both sectors are dependent on labour intensive, deep level mining and have been hit by labour instability. The world’s three largest platinum producers – Anglo American Platinum, Impala and Lonmin – endured an unprecedented five-month strike last year.
Mining employs about 500,000 people in South Africa, a critical source of jobs in a country that continues to be blighted by high unemployment and widespread poverty 21 years after the demise of apartheid.
Lonmin became the latest company to announce cuts when it said this month it was looking at a possible 3,500 job losses in an attempt to slash labour costs by 10 per cent.
The government is accused of exacerbating the industry’s problems by perpetuating policy uncertainty.
At the end of last year, gold mines employed about 119,100 people, down from 142,000 in 2012. Platinum provided 188,400 jobs in 2014, down from a high of nearly 199,200 in 2012, according to the chamber’s figures. Iron ore employed 21,800 people last year, down from 23,400 in 2012.
Copyright The Financial Times Limited 2015
(c) 2015 The Financial Times Ltd.
