Anglo American Platinum (AMSJ.J), the world's top platinum producer, said on Friday it would cut about 4,800 jobs, laying off 3,300 workers and paying off the rest, and will redeploy 1,600 more.
Job cuts are a sensitive issue in South Africa, where the unemployment rate is more than 25 percent and mine labor violence rooted in a union turf war has killed dozens of people over the past 18 months, mostly on the platinum belt.
The platinum arm of global mining group Anglo American (AAL.L) had plans in January to cut 14,000 jobs but reined in its plans in the face of a fierce backlash from the government and unions. Workers remain unhappy with the final result.
"We have said no single person should be forced to go home, it should all be voluntary packages or natural attrition. We are very disappointed," said National Union of Mineworkers (NUM) spokesman Lesiba Seshoka.
President Jacob Zuma and the ruling African National Congress (ANC) are keen to keep job losses to a minimum before elections next year and want to contain mining unrest, which also triggered damaging sovereign credit downgrades last year.
"This is about the best outcome that we could have so that the company can still do what is necessary to make itself profitable," said chief executive Chris Griffith.
"Returning the company to profitability will protect more than 40,000 jobs. If this company runs into the ground, there will be 40,000 people who lose their jobs, not 3,000," he told journalists on a conference call.
Amplats said "approximately 500 other opportunities" would be found, but did not give further details, bringing the total jobs affected under its restructuring plan to as many as 7,000.
The typical South African miner has around eight dependants, many of whom are subsistence farmers and live in rural areas far from the shafts, and so job losses have wide consequences.
The country's mines employ about 500,000 workers, a third fewer than before the end of white rule two decades ago, while the population has grown by over 40 percent since 1990.
WAGE TALKS, GOLD STRIKE
Pay negotiations in the platinum sector started this month, and on Friday the NUM served gold producers with a notice they would strike from Tuesday after wage talks broke down.
Huge wage hikes or strikes would hit Amplats' bottom line hard just as it strives to recover from last year, when low prices for the metal used to cap emissions in automobiles and a wave of violent wildcat stoppages pushed it into the red.
The Association for Mineworkers and Construction Union (AMCU), which represents the bulk of Amplats' workers after wresting tens of thousands of members from the NUM in the labor conflict last year, wants rises of more than 100 percent.
Griffith said the industry in South Africa, which sits on about 80 percent of known global platinum reserves, had its back to the wall.
"We are not playing games. This is an industry in real trouble. About half of this industry is making a loss."
Amplats' return to profitability hinges on the reconfiguration of its strike-hit Rustenburg mines where it plans to cut production by 250,000 ounces initially and by a further 100,000 ounces in the medium term.
Benefits are expected to start feeding through from next year when the 2.6 billion rand ($252 million) cost of the operational reshuffling is expected to be outweighed by long-term cost savings of 3.8 billion rand a year by 2015.
The new boss of Amplats' parent Anglo, Mark Cutifani, said on Thursday the group remains committed to its South African platinum mining business but only if it pays its way, saying "nothing is sacrosanct".
He also rounded on the "cowards, thugs and murderers" he said were behind South Africa's mining unrest - a veiled reference to AMCU, which has been accused by critics of using intimidation to grow its membership, allegations it denies.
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