Dark clouds gather over one of South Africa’s biggest employers

The South African mining sector has already shed thousands of jobs, with many more job cuts anticipated in the coming months.

Over the past few weeks, many mining companies have announced that they are retrenching workers to remain sustainable.

On Tuesday, 17 September 2024, Seriti Resources said it plans to cut as many as 1,137 workers across two opencast coal operations because the mines are unprofitable.

It said its Middelburg Mine Services and Klipspruit South-East mines were not currently commercially sustainable and required material restructuring to improve unit costs.

This announcement followed numerous other mining companies announcing job cuts in South Africa.

In March 2024, Impala Platinum (Implats) CEO Nico Muller warned that more job cuts are on the horizon as reducing costs becomes required to keep the industry profitable.

Muller said that if Implats cannot reduce its costs, the miner risks undergoing significant restructuring or absolute closure.

He explained that the mining industry – particularly Platinum Group Metal (PGM) miners – is under significant pressure.

“If you look at all of the major forces impacting PGM prices, it is clear that there are significant downward pressures on the prices,” he said.

“The world is at a consensus that a major recovery is not expected in the near term. It is therefore reasonable to expect – with continued cost inflation – that we are at risk.”

Sibanye Stillwater has slashed over 11,000 jobs from its mines since the start of 2023, which highlights the industry’s challenges.

Earlier this year, Sibanye Stillwater CEO Neal Froneman said the South African mining industry faces an existential threat.

The Minerals Council of South Africa echoed these views, warning that Platinum miners are increasingly looking to restructure their unprofitable shafts.

Platinum mining shafts in South Africa are among the world’s deepest, oldest and most expensive to run, exacerbating the impact of declining PGM prices.

These miners have also been hit by high labour costs, which, when combined with electricity, make up most of their costs.

However, local mining companies are being affected by more than just the previous problems with load-shedding and high labour costs.

Other factors, such as policy uncertainty, poor government support, and problems at state-owned rail firm Transnet, are hurting these companies.

The collapse of South Africa’s freight-rail services has driven iron ore and coal exports, two of the country’s biggest sources of foreign exchange, to multi-decade lows.

Many mining companies, including Kumba Iron Ore, Glencore, and Seriti Resources, have cut jobs as a result.

“Transnet Freight Rail’s target, while higher than last year, is below contracted volumes,” the government and the B4SA business group said.

They added that retrenchments in key economic sectors will continue if performance doesn’t improve.