Platinum miners cut jobs amid ‘perfect storm’

South Africa’s platinum group metal (PGM) miners face a challenging operating environment with lower PGM prices and escalating costs, and they are turning to job cuts to survive.

Afriforesight’s head of PGMs and chief sustainability officer, Deborah Chikukwa, told Business Day TV that PGM miners currently face a myriad of challenges. 

At the forefront of these challenges is the impact of a global economic slowdown, which has decreased the demand for PGMs, particularly platinum, palladium, and rhodium. 

This lower demand has been particularly prevalent in the automotive and industrial sectors and has, therefore, caused a noticeable decline in PGM prices. 

Chikukwa said the correlation between global growth concerns, high interest rates, and subdued demand, particularly in the auto industry, contributed to the sector’s ongoing price constraints.

Production costs are also a significant hurdle for PGM miners, especially compared to other mining sectors. 

Chikukwa explained that most PGM operations occur underground, increasing their production expenses. 

In particular, rising energy costs, which account for a substantial portion of PGM operations, present a significant challenge. 

In addition, chemical input costs have surged compared to pre-Covid levels, further squeezing these miners’ profit margins.

However, she said the most significant cost for PGM operations is labour, which constitutes between 50% and 60% of costs.

Therefore, in response to the lower price environment, PGM miners have had to implement cost-cutting measures, which have largely included significant job cuts. 

Major players in the South African PGM industry, including Sibanye-Stillwater and Anglo American, have announced job cuts or plans to cut jobs in the country.

In October, mining giant Anglo American announced that it had begun cutting jobs at its head office in South Africa. Around 181 jobs could be lost in this process.

In the same month, platinum miner Sibanye-Stillwater also announced that it would enter into Section 189 consultations to retrench over 4,000 workers amid the company’s restructuring.

The company plans to restructure four mine shafts, which could risk 4,095 South African jobs.