Widespread job losses expected in South Africa's mining industry

19 January 2009

According to a Frost & Sullivan report, South Africa's mining industry will suffer widespread job losses with resources companies restructuring operations in response to weaker demand and lower resources prices.

South African mining companies, according to the report, would be required to increase operational efficiencies and work out cost containment strategies with the effects of the economic downturn adversely affecting the commodities market.

In December 2008, a task team comprising government, labour and business representatives pledged not to resort to retrechments unless absolutely necessary and had complied a report on ways to preseve jobs in the industry.

The task team had emphasised internal company transfers and redeployment. Additionally it had also suggested  temporary layoffs, extended Christmas breaks and shorter working weeks, as alternatives to retrenchments. According to trade union Solidarity,  around 9,000 people could lose their jobs in the present downturn.

Frost & Sullivan expects gold production to fall from 240 tonne produced in 2008 to around 229 this year, but precious metals consultancy firm GFMS expects South Africa's gold output to rise slightly with new projects coming on stream.

The study also projects that high cost marginal operations would be dropped to preserve cash and ensure profitability. However, resources prices are likely to perk up by end second quarter with the easing of the global economic slow down though not to the extent to spur increased production.