World number one diamond-miner De Beers said in a statement on Friday said that its planned restructuring at its seven South African diamond mines could see 1 270 people lose their jobs out of a total of 9 442 people employed by De Beers Consolidated Mines (DBCM).
Global resources group Anglo American (Anglo) has a 45% stake in De Beers.
DBCM announced that it will be issuing a formal notice for all seven of its South African diamond mines to the National Union of Mineworkers (NUM) and to staff in terms of Section 189 (3) of the Labour Relations Act 66 of 1995.
“The Section 189 notice applies to all of De Beers’s operations in South Africa and the group headquarters [in Johannesburg],” De Beers public and corporate affairs manager Vukani Magubane said.
“This notice will serve to inform the union and staff that the company is contemplating retrenchments,” De Beers said.
Five out of seven of the DBCM mines in South Africa are currently operating at a loss, the company added.
The blanket issuing of the Section 189 notice at all of De Beers’s mines and operations in South Africa is “worrisome”, NUM spokesperson Moferefere Lekorotsoana said.
Diamonds are one of the commodities that are better off when compared with gold or platinum, for instance, Lekorotsoana added.
In dollar terms, De Beers on average increased the price at which it sells its rough diamonds by 14% in 2004, followed by a 3% increase in January.
Anglo chief executive Tony Trahar said on Wednesday that De Beers’s February sight, held last week, was one of the strongest in a number of years.
The move to issue a blanket Section 189 notice is a “cheap solution” and De Beers should identify its real problems clearly and come up with proper solutions, Lekorotsoana said.
“The strong rand is a silly argument and it is made when the mining companies aren’t making enough money or when the rand isn’t sitting at the level they had projected. The companies have no concept about seeing people as assets,” he added.
De Beers’s seven mines in South Africa are: Venetia and the Oaks mines in the Limpopo province; the Cullinan mine near Pretoria; the Koffiefontein mine in the Free State; the Kimberley and Finsch mines in the Northern Cape; and the Namaqualand mine on the western coast.
The areas where De Beers’s mines are located are already hard hit by unemployment and poverty and any restructuring will make things worse, Lekorotsoana said.
DBCM has already issued a Section 189 notice of restructuring to the NUM and staff association for the Koffiefontein diamond mine.
In 2004, De Beers’s mines in South Africa produced 13,7-million carats of diamonds, with the Kimberley mine producing 2,05-million carats and the Venetia mine 7,2-million carats.
“The company has introduced a number of measures to increase revenue, improve efficiencies, curtail costs and to mitigate the impact of the weak dollar, but the realities of the current financial and operational climate continue to impact adversely on the sustainability of the company,” DBCM said.
“This situation has necessitated a re-examination by management of the current company business model, and the company has considered a variety of structural changes that will improve efficiencies, including a move to a centre of expertise and shared services,” the group added. — I-Net Bridge