/ 4 February 2005

Jobs cut as De Beers’s profits rise

De Beers Consolidated Mines (DBCM) will most certainly start its planned job cuts in Koffiefontein.

The Mail & Guardian reported three weeks ago that the diamond miner planned to cut 1 400 jobs in its South African operations.

On Wednesday, the company notified the National Union of Mineworkers (NUM) of “its intention to enter into consultation with respect of plans to reduce losses at its Koffiefontein mine”. This happened one day before De Beers released its 2004 annual results.

The Koffiefontein mine is located in the southern Free State and employs 795 people. In its notice the company said the mine had been experiencing severe financial difficulties since 2001. It attributed the difficulties to “geo-technical challenges” and depleting ore. The strong rand has aggravated the situation.

The notice also said that “careful consideration has been given to the socio-economic impact of the decision on the local community”.

NUM spokesperson Parks Modise confirmed receipt of the notice, but would not comment as he had not studied the document. “We will enter negotiations with an open mind and try to save as many jobs as we can,” he said.

At the presentation of the results De Beers’s CEO Gary Ralfe said: “We know that 10 000 people [in South Africa’s operations] depend on us for their livelihood, but we have to run the mines profitably.”

In its director’s comment the company said “2004 was another good year for the diamond industry” and revealed an improved performance for the year.

Last year, De Beers’s South African mines produced 13,7-million carats, 15% more than it had produced in 2003. Globally the company’s production increased by 7% to 47-million carats.

Its worldwide diamond sales totalled $5,6-billion, 3% higher than in 2003. The company also declared a 12,5% increase in its dividend to $450-million.

De Beers has also completed restructuring of its South African assets to conclude a black economic empowerment transaction in 2005.