Platinum miners to cut jobs

South Africa’s largest employer of mineworkers, Sibanye-Stillwater, may be forced to close unprofitable shafts and cut jobs as prices of Platinum Group Metals (PGMs) continue to plummet. 

This warning was issued by the CEO of Sibanye-Stillwater, Neal Froneman, in an interview with Reuters this week. 

Froneman said job cuts in platinum mining are unavoidable as prices continue to fall, requiring “significant restructuring” of the sector. 

“We certainly can’t run unprofitable shafts, and our cost structure is probably the lowest in the industry. So if we have loss-making shafts, of which we have a few, they will have to be closed, and I say this with all the sensitivities on potential job losses,” said Froneman. 

Sibanye was among those making record profits when PGMs rhodium and palladium hit almost $30,000 and $3,400 an ounce, respectively, after Russia invaded Ukraine last year.

But the price of platinum touched its lowest level in a year on Wednesday before recovering to $875.86 an ounce, while palladium hit its lowest level since November 2018 at $1,179.66 an ounce.

Closing some operations running at a loss may be necessary to remain profitable and preserve the majority of jobs, said Froneman. 

Sibanye, which has platinum mines in SA and in Montana in the US, employs about 85,000 workers.

While prices for platinum metals, used in catalysts that curb toxic vehicle emissions, may recover, that is not likely to save mines that were profitable only with record high prices, said Froneman.

Neal Froneman
Sibanye Stillwater CEO Neal Froneman

South African miners shedding jobs

Froneman’s warning of job cuts in platinum mining follows the initiation of retrenchment processes at some of the country’s largest miners, including Anglo American and Glencore

Anglo American has begun cutting jobs at its head office in South Africa, following reports of other mining giants issuing retrenchment notices as Transnet’s deteriorating performance weighs on their operations.

The focus will be on corporate positions after the company split its business into two regional divisions earlier this year, one covering the Americas and Africa and the other Australia.

The National Union of Mineworkers (NUM) said that 181 notices were sent to Anglo American’s Kumba Iron Ore unit staff warning they could lose their jobs.

An Anglo American spokesman confirmed that the notices had been sent out in South Africa, stressing that it is a global process.

Anglo American’s job cuts follow those of fellow global mining giant Glencore, which launched a retrenchment process last month at one of its coal operations due to an inability to transport coal for export and declining coal prices.

Glencore began a retrenchment process at its iMpunzi coal complex in Mpumalanga, which has 1,138 permanent employees.

The general manager of iMpunzi, Hlayiseka Chauke, said Transnet Freight Rail’s poor performance was the primary consideration behind the retrenchment process.

Transnet’s performance has been poor since the beginning of 2021, with export volumes railed to the Richards Bay Coal Terminal dropping from as high as 80 million tonnes to about 50 million tonnes in 2022.

In response, many miners chose to truck coal to Maputo, Durban, and Richards Bay. However, this has become unsustainable following a decrease in the price of coal to an average of $100 per ton in 2023 from $200 per ton in 2022.

“This directly impacts iMpunzi Complex in that there are insufficient trains available to move all the export product to the port, and trucking has become economically unsustainable due to lower prices,” Chauke said.

iMpunzi has an annual capacity of 10.3 million tonnes but can only transport 6 million tonnes via rail for export. Chauke said this is unsustainable.

Seriti’s Klipspruit colliery

Fellow coal miner Seriti Power issued a Section 189 retrenchment process at its Klipspruit colliery, affecting 605 workers.

“Stockpiles at our export mines remain high while stockpiles at Richards Bay Coal Terminal remain low due to persistently low export coal railings to port,” it said.

Seriti’s chief people officer, Ndumi Khoza, said despite efforts to cut costs over the past five years, the colliery is not commercially viable and can become a financial risk to Seriti Group.

“If no action is taken, Klipspruit will lose between R657 million and R949 million in the 2024 financial year alone, which puts the whole group at a huge business risk.”