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In a free enterprise system, the Government acts as enabler. It sets the rules, revisits them to ensure they are fair, and provides certainty so that business can invest and unlock wealth inherent in a nation’s people and inanimate resources. The market system, described in 1776 by Adam Smith as “the invisible hand” allocated resources, rewarding the efficient. In a socialist system, bureaucrats believe they are better positioned to allocate resources, so interfere with the economic levers to reward those they believe deserve it and punish they don’t agree with. History has proven time and again that free enterprise is the superior system. Yet power corrupts logic. And yesterday the ANC Government’s socialist tendencies were brought to the fore by a Mining Minister who took the extraordinary decision of removing a licence to operate owned by one of the few major global mining groups that’s been prepared to invest in South Africa. This heavy handed action against Glencore’s Optimum mine, on the basis that the loss-making mine’s retrenchment process was “inhumane”, will send a strong signal to other potential investors. Capital is cowardly. But if you living under the delusion that China will swoop in when the Western companies depart, then this action appears deliberate rather than myopic. – Alec Hogg
Business Day: Ramatlhodi suspends Glencore licence
THE Department of Mineral Resources took the rare step on Tuesday of suspending the mining licence of Glencore’s Optimum Colliery‚ coinciding with the news that Glencore was putting the mine into business rescue because of an uneconomic contract with Eskom‚ the newspaper reported.
Optimum‚ which employs 1‚500 people including contractors‚ halted production of export coal earlier this year because it was no longer profitable. The decision affected 1‚067 jobs.
After talks with the trade unions‚ forced retrenchments were reduced to 359. Another 267 chose voluntary retrenchment and 86 were employed at other Glencore units.
Mineral Resources Minister Ngoako Ramatlhodi said the retrenchments were “inhumanely conducted” and “disregarded all the legal prescripts”. He said other mining companies should follow the law on retrenchments if they did not want to suffer the same fate as Optimum.
Source: RDM News Wire.
S.Africa orders Glencore to shut coal mine over job cuts
By Zandi Shabalala
JOHANNESBURG, Aug 4 (Reuters) – South Africa’s mines minister has ordered Glencore to suspend all operations at a coal mine because of the way it planned to carry out job cuts.
The country’s mining industry is battling sinking commodity prices, rising costs and labour unrest. Glencore announced in July it would cut 380 jobs at Optimum and shut part of the mine due to lower coal prices. It added on Tuesday the mine’s finances were strained because it was supplying state power firm Eskom with coal at prices lower than the cost of production.
Job losses are a politically and socially charged issue in Africa’s most advanced economy, where the unemployment rate stands at about 25 percent – although some analysts say the figure is higher.
Mines Minister Ngoako Ramatlhodi said on Tuesday the 10 million tonne-a-year mine should be shut because Glencore did not follow legal procedure in the process of cutting jobs.
“The retrenchments … were inhumanely conducted and disregarded all the legal prescripts which govern the process of retrenchments,” he said a statement from his ministry, without being more specific.
Ramatlhodi later told Reuters the government was suspending operations at the mine until the issue was resolved.
Glencore, Eskom and the department of trade and industry will meet later on Tuesday with the mines ministry to try to find a solution, the minister said.
Glencore said it had complied with all legal requirements relating to job cuts, including consultation with government and unions for an extended period of time.
It said an agreement signed in 1993 to supply 5.5 million tons of coal a year to Eskom was unsustainable and that it had initiated a “business rescue” at Optimum.
Business rescue, similar to chapter 11 in the United States, allows a financially distressed company to temporarily delay creditors’ claims against it or its assets.
Global coal prices have fallen by around 10 percent this year, partly due to oversupply, extending losses from a bearish trend since 2011. This is particularly concerning for South Africa as it contributes more than any other mining commodity towards its gross domestic product
Eskom spokesman Khulu Phasiwe said it was in the process of renegotiating its supply contracts with coal companies because it was paying too much given softer commodity prices. It did not comment on Glencore’s operations.
Anglo American, a major supplier of coal to Eskom, said it had started talks with the power utility regarding coal supply contracts.
“The discussions are informed by Eskom’s intention to review its cost structure,” Anglo said, adding it welcomed the process.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.