”First wages were cut, now workers are just waiting to be told to pack their bags and go,” Joseph Talane, a worker at De Beers’s Cullinan mine, remarked gloomily this week.
Talane’s job is under threat after De Beers, the world’s biggest diamond producer, announced its intention to fire 14% of its South African workers because of the continuing effect of the strong rand on earnings. Five of De Beers’s seven mines are running at a loss.
The company said it would offer retrenchment packages to 1 270 of the 9 442 people it employs at seven mines in South Africa — a move strongly condemned by trade unions.
The rand has gained 14% against the dollar over the past six months, hitting the mining industry and other exporters. Falling profits caused by the rand’s gains have also prompted Durban Roodepoort Deep (DRD), Kumba, Harmony and Anglo Platinum to cut jobs.
Talane, who has worked underground for 33 years, could not hide his frustration. ”Two of my children are at university and three are at school. How will I pay for their tuition if the mine fires us?”
He said his monthly earnings had already dropped from R6 000 to R4 000 after De Beers cancelled the monthly performance bonus.
The largely white trade union, Solidarity, complained that De Beers had issued a single retrenchment notice for all its mines. ”General practice is to determine the reason for operating losses per business unit,” said union spokesperson Dirk Herman.
Herman said the priority should be improved planning and use of financial instruments to protect the company against the vagaries of the weak dollar, not laying off workers.
”Diamonds are doing better in the current economic climate than gold or platinum. It is pointless to attempt an instant solution by issuing an indiscriminate article 189 notice. Nothing is achieved by adopting a motion of no confidence in one’s workers when production targets are up to scratch.”
De Beers’s spokesperson, Abel Madonsela, said management had introduced measures to offset the impact of the weak dollar by raising revenue, improving efficiency and curtailing costs. The measures included moves to centralise expertise and share services. ”However, the realities of the financial and operational climate continue to impact adversely on the sustainability of the company.”
Speculation is rife that DRD may soon shut up shop, given its dismal performance in recent months. Shares in DRD Gold suffered their steepest fall in more than 14 years last week after the company’s auditor expressed concern about whether the company could stay afloat. DRD’s United States share price fell by 48% in one day, while the group is currently R200-million in the red.
After firing more than 7 000 workers since July 2003, DRD is reportedly looking to cut some of the 5 600 jobs at its unprofitable North West unit.
Ilja Graulich, head of DRD investor relations, said it was imperative for the company to restructure its operations to restore it to profitability.
Kumba has announced its intention to retrench 400 workers, while Anglo Platinum this month completed a retrenchment exercise affecting 300 managers.