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Fight brewing between Anglo American and South African government
February 7, 2013

Anglo American’s announced plans to cut 14,000 jobs from two mines in South Africa has sparked a showdown between South African president Jacob Zuma and incoming Anglo American president Mark Cutifani, who said the government’s plan to review mining licenses are “out of order.”

Anglo American announced plans to confront its struggling platinum business with the sale of one mine and the workforce reduction at two more mines.

The planned lay-offs at Anglo American Platinum come as South Africa's government struggles with a jobless rate that official figures put near 25 percent, but which many believe to be higher, reported Reuters.

The ruling African National Congress said the overhaul justified a review of mining licenses and Zuma said that threatening mine closures was almost “blackmail.”

Cutifani, who is due to move to Anglo American in April from his current role as chief executive of AngloGold Ashanti, said industry and government should be careful of the words they use as people can interpret them the wrong way.

“Threats to licenses are out of order,” Cutifani told a mining conference in Cape Town. “I hope after the hue and cry from investors all around the world ... we’ve all learned the lesson that we shouldn’t be threatening licenses when a company is looking at preserving its life.”

“At the moment the industry and the government is shouting at each other from our respective corners,” he said.

The ANC wants to avoid job losses ahead of a general election next year, but thousands of miners could be laid off as their employers grapple with soaring costs and poor productivity.

Amplats, as Anglo American’s platinum arm is commonly known, swung to its first annual loss in 2012 and the parent company has said both the industry and its own unit — the world’s top producer of platinum — are in an unsustainable position.

Anglo American’s outgoing CEO Cynthia Carroll said this week the company would press ahead with the restructuring despite the objections from the ruling party, government and unions.

Increased political and social risks had been a significant factor in the company’s recent struggles, including violent labor strikes last year.
“In South Africa, we don't talk about productivity,” Cutifani said. “It may not be the most important issue today, but in 10 or 15 years it is the most important. It is the only thing that will lift South Africa out of poverty.”
 

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