South African mining companies are fretting about the impact of sliding global commodity prices, raising the risk of job losses and renewed concerns about labour strife heading into the new year.
Commodity prices have gone into free-fall led by crude oil as demand from Europe and China, the biggest purchaser of South African minerals, falters.
The price slide now portends what could be a rough start to 2015 as mining companies – from coal to iron ore, to platinum producers – face off with the unions amid efforts to mitigate the impact of what is increasingly becoming a bearish case for commodities.
Repercussions
Labour union representatives said yesterday that the commodity rout looked set to put pressure on mining companies to slash jobs. The step would worsen a fragile labour relations environment after the country endured a five-month work stoppage that shut the platinum industry over wage demands earlier this year.
“We are now going to see section 189 notices issued across South Africa in the mining industry,” Solidarity’s Louis Pretorius said. He added: “Harmony Gold and Sibanye Gold have announced possible job cuts as a result of commodity prices falling.”
Employers are required by section 189 of the Labour Relations Act to give notice to trade unions before retrenching staff or downscaling operations.
The local mining industry employs about 500 000 people, thus constituting one of the critical pillars of employment for the majority of the unskilled workforce. Any job losses resulting from the commodity slump would compound what is an untenable employment picture, with the official jobless rate persistently standing north of 25 percent.
The economy remains dependent on the export of minerals and metals. Directly exported minerals and metals account for as much as 60 percent of all export revenue.
Roger Baxter, the chief economist at the SA Chamber of Mines, said job losses would be a last resort, but conceded that the industry faced a tough environment, which had been made worse by falling prices.
Commodity prices
Yesterday, the Bloomberg commodity index of 22 raw commodities sank 1.4 percent as the stronger greenback damped demand for dollar-denominated assets. Gold sank, fixing at $1 195 (R13 212) an ounce and silver fell 2.6 percent.
“The commodity prices may lead to job losses only as a last resort. It is not easy at the moment. Mining in South Africa is more challenging in the last 10 years,” Baxter said.
The sectoral manager for minerals at Uasa, Frik Van Straten, said the union was busy with the section 189 process at several mining houses hit by the commodity price slump. He said the union would start talks with Harmony, which had announced plans to cut jobs yesterday.
“The lack of demand for these resources will have an impact on the country as a mineral producer.”
He said the possibility of job cuts was a worry, but like Solidarity whose majority of members were skilled, Uasa was able to move its members to other positions. “Because of special skills that our members have, it is easier to place them elsewhere. We represent a small number of the unskilled labour force. And all our members in all the grades have been affected by changes in the industry,” he said.
National Union of Mineworkers (NUM) spokesman Livhuwani Mammburu said workers were always in the firing line when the mining companies were not having favourable trading conditions.
He said possible retrenchments in the the industry were of great concern, especially after what the industry went through earlier this year.
He said this time around, executives should be the first to be retrenched.
“What is surprising about the mining companies is that when commodity prices are not doing well in the market they always look at retrenchments,” he said, adding that when the mining companies were doing well, workers “do not get the benefit from the booming period”.