[miningmx.com] – GLENCORE said it would retrench between 600 and 700
employees at its Optimum Coal Mines in Mpumalanga province which was struggling to
make money at the current price of coal.
It’s thought some five million tonnes of coal a year would be taken out of the market as
a result.
The affected operations at the mine’s open-cast section would be placed on care and
maintenance whilst sufficient mining would continue to supply to Eskom’s Hendrina
power station, Glencore said.
Glencore had also agreed to provide funding to Optimum to enable the mine to pay the
full retrenchment costs as per an agreement at the Commission for Conciliation,
Mediation and Arbitration (CCMA), an “extensive process” in which Glencore said it had
demonstrated the operations were not financially viable in the current market.
The export price of thermal coal has fallen to about $60 per tonne, down some 7% on
2014 averages, according to a recent presentation by the Chamber of Mines. Glencore
said retrenchments were, therefore inevitable.
“Optimum will therefore be proceeding with the closure of some of the operations which
will result in the retrenchment of between 600-700 employees,” the company said. It
would reopen the operations if economic conditions improved.
The restructuring plans did not go down well with the National Union of Mineworkers
(NUM) which said in June that Glencore had no interest in the lives of its workers – a
statement that drew a rebuke from the Swiss headquartered company.
The NUM also said it would “declare war” on retrenchments in the South African mining
sector whilst mines minister Ngoako Ramatlhodi said mining firms ought to follow
regulations before scaling back mines.
The retrenchments are Optimum also form an interesting backdrop to wage negotiations
in the sector.
The Chamber of Mines confirmed a Bloomberg News article in May that the NUM had
demanded a pay increase of 15% for members working at South Africa’s coal mining
firms.
Coal mining labour unions in 2013 signed a two-year deal with the companies for
increases of as much as 11% in the first year. The NUM has members working at Anglo
American, Glencore and Exxaro Resources.
