Amplats CEO defends mines sales

Chris Griffith says the decision was made before the strike, adding that the mines still have potential.

FILE: Amplats says Monday’s announcement that the company would be selling some of its most labour-intensive mines was not related to the recent strike in the sector. Picture: AFP.

JOHANNESBURG - Anglo American Platinum (Amplats) chief executive Chris Griffith says Monday's announcement that the company would be selling some of its most labour-intensive mines was not related to the recent strike in the sector.

The world number-one platinum producer said it would be selling Union mine, its operations at Rustenburg and the Pandora joint venture.

The news came on the back of a poor results announcement, with Amplats saying it had lost over 420,000 ounces in production due to the strike while earnings fell almost 90 percent.

For around five months, tens of thousands of miners downed tools as the Association of Mineworkers and Construction Union (Amcu) entered a dispute with Amplats, Impala Platinum and Lonmin on the North West platinum belt.

The strike cost the companies, workers and country at large billions in lost revenue, wages and production.

However, Griffith says this has nothing to do with the decision to sell.

"The sale of the assets has got nothing to do with the strikes that we've just come through. Whilst that may sound difficult to believe, it's important to go back to January 2013 when we announced the restructuring of the business."

He explains that the company announced the consolidation of its Rustenburg operations from five mines to three, Union's mines from two to one and improving overall revenue.

Griffith says the company specifically stated that it would stop driving capital to those mines at the time and that the sale is simply a follow-on from that decision.

Amcu's rival union, the National Union of Mineworkers (NUM), which did not participate in the latest wave of industrial action, has criticised the decision.

The union said it had expected changes in the wake of the strike but hoped drastic moves such as the sale would be avoided.

The union's Ecliff Tantsi says more than 20,000 workers now stand to lose their jobs.

"We want to call on Anglo American to exercise caution because this will lead to a social catastrophe for the South African public."

But Griffith believes the mines will remain profitable, meaning potential buyers might not need to make drastic changes.

"We've now done the hard work. We have lowered their overheads and actually made them more profitable," he argues.

"But if we don't spend capital on them, in time they will just dwindle down and run themselves out."

When asked why his company doesn't want to spend its own capital on maintaining a profit from these mines, he responded, "Because of the quality of the assets that we have."

_ Listen to Griffith's full interview on The Money Show._