Anglo American's platinum arm, under pressure from South Africa's government, is expected to sharply scale back plans to cut 14,000 mining jobs as part of an overhaul of the loss-making business, industry sources said on Thursday.
Anglo American Platinum, the world's top platinum producer, is battling to restore profits, but its plan to cut back production and mothball two mines near the platinum belt city of Rustenburg have met fierce resistance from the ruling African National Congress (ANC) and unions.
The 14,000 jobs initially at stake would equate to 3 percent of South Africa's mining labour force, and the planned lay-offs come at a time when social tensions are running high. Labour unrest and wildcat action last year triggered violence that killed over 50 people and led to a credit downgrade for Africa's biggest economy.
"The government is being incredibly tough," said one of the sources, after almost four months of talks.
Another source familiar with the platinum industry and the South African government said limiting the job cuts to half the initial target - or even less - could give the company political space and a political victory, while the original target could eventually be achieved through attrition, given the high turnover in the sector.
"The goal is not achievable at the flick of a switch. You have to look at ways of getting there in as short a time as possible," the source said.
Both sources said talks were ongoing and no decision was final, but the first source said Amplats was willing to reduce the number of jobs it plans to cut by as much two thirds. Under one of three scenarios presented by the company, it could cut just 5,000 jobs, the source said.
A South African union source also confirmed Amplats had backed down from its original target of 14,000, though unions have not taken part in talks that have been confined to the government and Amplats.
The company's talks with the government over the Amplats restructuring have been going on almost since the plan was unveiled in January.
Negotiations were extended for a month at the end of March and Amplats said on Tuesday they had wrapped up and the final plan would be made public next week.
The stakes are high all round.
Amplats suffered its first loss last year because of the illegal strikes and the low platinum price, and it says cuts are crucial to any hopes of swinging back into profit.
For Anglo American, ending losses in platinum is a crucial part of the company's own turnaround effort.
The ANC-led government, meanwhile, is highly sensitive about jobs ahead of elections next year, in a country where one in four adults is unemployed.
Political temperatures have also been raised by last year's blood-letting on the platinum belt, which was rooted in a labour turf war that saw the militant Association of Mineworkers and Construction Union (AMCU) poach tens of thousands of members from the dominant National Union of Mineworkers (NUM).
The NUM is a key political ally of the ANC and so for the ruling party, the union war has meant it has lost tens of thousands of potential voters and their many dependents.
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