JOHANNESBURG ? ?Anglo American Platinum , the world's top platinum producer, said it will mothball two South African mines, sell another and cut 14,000 jobs in moves to restore profits that may provoke a repeat of last year's strikes when about 50 people died.
In a long-awaited review announced on Tuesday that is seen as crucial to the flagging fortunes of Anglo American , which owns about 80 percent of Amplats, the platinum producer said it aimed to cut output by around a fifth or 400,000 ounces.
The price of platinum rose 1.6 percent in response, leaping past gold for the first time in 10 months.
Labor reaction was swift, with an Amplats Labor leader threatening a strike across its South African operations if the indefinite closures, when they would be put on "care and maintenance", go ahead.
"If they put any shaft on care and maintenance, all of the operations will go on strike. Nothing like this will be allowed," said Evans Ramogka, an Amplats Labor leader in platinum belt the city of Rustenburg, which will bear the brunt of the job cuts.
Activists brought many of South Africa's platinum and gold mines to a standstill last year in a wave of violent wildcat strikes. The unrest was rooted in a union turf war and aggravated by income disparities within the industry and low wages for dangerous work.
If 14,000 jobs are lost, it will represent about three percent of South Africa's mine Labor force and set back government efforts to cut unemployment from over 25 percent.
The ruling African National Congress (ANC) is losing support among mine workers before general elections next year. The National Union of Mineworkers (NUM), a base of ANC electoral support, is rapidly losing members to the militant Association of Mineworkers and Construction Union (AMCU) and other groups.
"As the NUM we are extremely disturbed by these job losses and we are asking workers to be united to defend their jobs," NUM General Secretary Frans Baleni told Reuters.
Amplats said on Monday it probably fell to a full-year loss because of the 2012 strikes, which were centered on Rustenburg.
It said two of its mines in Rustenburg, Khuseleka and Khomanani would be put on "long-term care and maintenance" - when mines are maintained so that they could be reopened in future but are not operated - because of their high costs.
Amplats also said it would "divest the Union mines at the right time - to maximize value under different ownership". Reuters reported on Monday Amplats was likely to sell Union.
SAVING THE COMPANY
Amplats chief executive Chris Griffith said on a conference call with reporters that the proposals were not a short-term response but were vital to "save the company".
"We must evolve to align the business with our expectations of the platinum market's long-term dynamics and address the structural changes that have eroded profitability over time," he said.
The proposals will have to be pushed through by new Anglo American chief executive Mark Cutifani, who will take over from Cynthia Carroll in April.
Cutifani hailed South Africa as an investment destination as he turned around bullion producer AngloGold Ashanti but is also a realist who will want to deliver for shareholders.
Investors applauded the moves. "It's good that they've made a good, strong first move and this will place them on a great footing to profit when the cycle does turn," said Nic Norman-Smith, chief investment officer at Lentus Asset Management in Johannesburg, which owns Amplats shares.
South Africa is home to about 80 percent of the world's known platinum reserves, but soaring power and Labor costs and depressed prices for the metal - used in autocatalysts to lower emissions - have conspired to make much of the industry unprofitable.
A tipping point may have been reached last year by the illegal strikes that hit production and bottom lines.
(Additional reporting by Sherilee Lakmidas and David Dolan in Johannesburg, Agnieszka Flak in Rustenburg and Clara Ferreira-Marques in London; Editing by David Stamp)
Source: http://feeds.foxbusiness.com/~r/foxbusiness/markets/~3/p3J4yHLPEOQ/
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