South Africa’s Kumba Iron Ore said it would reduce the scope of its operations, cut costs and jobs at its Sishen Mine, near the town of Kathu in the Northern Cape Province, amid sharply lower iron ore prices, increased capital costs and increased operating expenses due to the current high waste stripping requirements.
The company, therefore, plans to restructure Sishen Mine to a lower cost pit configuration. In view of this, it has commenced a consultation process about workforce reductions.
“The restructuring of the mine will impact approximately 2,633 Kumba employees,” a statement by Kumba says. “Contractors at the mine have commenced with their restructuring process and approximately 1,300 contractors will be affected.”
With prices of commodities remaining low for a long stretch, mining companies in South Africa have informed the government that they plan to cut about 32,000 jobs, in accordance with Section 52 of the country’s mineral resources law which obliges companies to inform the Mineral Resources Minister if 10 percent of a workforce or more than 500 people are likely to lose their jobs in a year.
Mining employs about 440,000 people in South Africa, a country which grapples with high unemployment rate.
Kumba’s Chief Executive Officer Norman Mbazima said the decision to sack almost 4,000 people has been extremely difficult and was made after all other avenues had been exhausted.
“We are mindful of the sensitivity that this situation demands, and are committed to supporting all our employees at Sishen, as we have done throughout the other restructuring processes at Kumba. We aim to ensure that our people are treated with the same care and respect throughout this difficult process,” Mbazima said.
Kumba Iron Ore Limited is a member of the Anglo American plc group and holds 73.9 percent interest in Sishen Iron Ore Company Proprietary Limited (SIOC), an entity it manages. The bulk of the company’s iron ore production comes from Sishen mine where it is now scaling back operations. Production at Kumba Iron Ore fell 7 percent to 44.9 million tonnes last year.