* Mining sector jobs pact seen as toothless
* S (Other OTC: UBGXF – news) .Africa faces 25 percent unemployment rate
* Falling metal prices, rising costs hobble mines
By Zandi Shabalala
JOHANNESBURG, Sept 4 (Reuters) – A plan by the South African government and mining companies to stem the wave of job losses sparked by falling metal prices and rising costs is seen as likely to do little to stem layoffs as it does not include a total freeze on job losses.
The 10-point jobs pact urges firms to extend consultations with workers before laying them off and set up a fund to assist laid-off miners but does not expressly prohibit firms from firing workers, and is widely seen as politically motivated.
The embattled mining industry, which contributes 7 percent to the gross domestic product of Africa’s most advanced economy, has cut about 10 percent of jobs over the last 10 years, according to data from the Chamber of Mines. This has drawn criticism from the government which is trying to fend off more job losses as it grapples with a 25 percent unemployment rate.
“It (Other OTC: ITGL – news) ‘s a knee-jerk approach it should have happened at least three years ago. It’s kind of an unachievable desire that will never be realized,” Joseph Mathunjwa, president of the hardline Association of Mineworkers and Construction Union (AMCU), said.
AMCU, which led a record five-month strike in the platinum sector last year that damaged the financial viability of some mines was the only labour group that did not sign the jobs pact, pending consultations with its members.
Mines minister Ngoako Ramatlhodi and the Chamber of Mines said about 12,000 jobs in the sector were at risk.
President Jacob Zuma’s ruling ANC party is facing increasing pressure from the left-leaning parties who accuse him of neglecting the working class ahead of local elections next year.
“There is constant political interference in mining today in South Africa,” said Peter Major, a mining analyst at Cadiz (NasdaqGM: CDZI – news) .
“It might slow down the truck with no brakes speeding down the hill, but its not going to stop it.”
Following the strike led by AMCU, Anglo American Platinum , Impala Platinum (Other OTC: IMPUF – news) (Implats) and Lonmin were forced to close shafts, step up mechanisation efforts to save on labour costs and sell assets.
Implats said it could cut jobs at its Rustenburg operations in response to weaker platinum prices as its full-year profits slumped almost 60 percent. Rival Lonmin plans to cut up to 6,000 jobs, or 15 percent of its workforce.
The Chamber of Mines, which represents mining companies, said the mining industry was in a crisis.
“There is no doubt that retrenchments will happen but it’s just about how many people are getting retrenched,” said Motsamai Motlhamme, who heads employee relations at the chamber. (Editing by James Macharia and David Evans)
