Anglo American Platinum (Amplats) is to shut down four mine shafts in South Africa, cutting production by up to 19 percent.
The announcement comes following the conclusion of the company’s review of operations – which began in February 2012 -, which has prompted the need for changes to be made to maintain financial viability in the long-term.
“The platinum business has attractive underlying fundamentals, but we are facing tough decisions to restore profitability to our operations. 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,” said Chris Griffith, Chief Executive Officer of Amplats.
In order to streamline the company’s operations, Amplats will be placing the four mines in the Rustenberg area – namely the Khuseleka 1 and 2 and Khomanani 1 and 2 shafts – on long-term care and maintenance, which will cut production by approximately 40,000 ounces annually, but will also mean significant job losses as the number of staff required to oversee the maintenance phase in minimal.
Amplats also announced that intends to divest of the Union mines at the opportune moment, noting that the Union mines: “are likely to be of greater value under different ownership, particularly in comparison to the other attractive growth options in the Company’s portfolio”.
In the meanwhile, the Union North Declines shaft will see operations stop, and the Union North and South Shafts will be combined into one operation. The Mortimer Merensky concentrator is another asset that will be placed on long-term care and maintenance while a potential sale option is sought.
Acknowledging that up to 14,000 jobs may be lost – with 13,000 billed to affect the Rustenberg area, where the core of strike violence took place during the mining sector’s unrest last year -, the company has pledged to make efforts to create new employment opportunities in the area, noting that Amplats is targeting the creation of 14,000 jobs.
“The job creation initiatives will focus on housing, infrastructure and small business development in Rustenburg and the labour-sending areas,” the company disclosed.
