Mining cries crisis

Labour unions have welcomed the proposed delay in implementing the new mineral and mining royalties legislation until 2010 as a good way to protect jobs in the mining industry. But they have cautioned that the delay should be conditional.

More than 20 000 jobs in the mining industry are on the line as companies battle to lower costs to deal with the economic slowdown in the industry, partly as a result of the global financial crisis. The Mining Royalty Act, which would oblige all mining companies to pay levies from their sales to government, was scheduled to take effect in May this year.

But in his budget speech last week Finance Minister Trevor Manuel proposed that implementation be delayed until March 2010 to mitigate job losses in the industry.

”This provides a boost to the industry of about R1,8-billion, which will assist in mining job losses,” Manuel said.

Manuel also announced that government was planning to establish an agency that would be jointly managed by business, labour and government to encourage economic development in mining towns or labour-sending areas affected by retrenchments.

National Union of Mineworkers boss Frans Baleni said Manuel’s proposal on the mining royalties would go a long way to prevent job losses and that companies should not just view it as an opportunity to increase profits. Baleni suggested that the delay in mining royalties should apply only to companies that are committed to saving jobs. He said the union would meet Minerals and Energy Minister Buyelwa Sonjica on Thursday to take Manuel’s proposal forward.

”We want to make it very clear upfront that if stakeholders are not going to play by the game we will find ways to fight this,” he said.

Spokesperson for the trade union Solidarity Jaco Kleynhans said his union would use Manuel’s proposal in its negotiations with mining companies to save further retrenchments. He estimated that more than 20 000 were at risk and that the number was expected to rise in the near future.

Major mining companies planning retrenchments include Lonmin (6 000), De Beers (8 000), DRD Gold (1 300) and Simmer & Jack (500).

Last week Anglo Platinum also announced its plans to retrench 10 000 workers by the end of the year.

The company said it would cut 8 000 jobs in the first half of the year. This includes 6 000 temporary workers whose contracts will not be renewed, as well as 2 000 jobs expected to be reduced through natural attrition in the first half of the year and the same amount in the second half.

Kleynhans described the effect of the current economic conditions on the platinum industry as a crisis. ”The flourishing platinum price is in the distant past. While the price reached a record level of $2 290 in March last year, analysts predict that the price of the precious white metal could drop as low as $700 per ounce.

”Furthermore, the price could fall even further if the current economic crisis places additional pressure on the industry. Solidarity is extremely concerned about this because it could threaten even more jobs.”

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