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Kumba Iron Ore tells NUM to brace for layoffs

The group says it plans to reconfigure its Sishen mine, the largest iron ore operation in Africa.

FILE: Kumba Iron Ore said it plans to reconfigure its Sishen mine.

JOHANNESBURG - Kumba Iron Ore has told the National Union of Mineworkers (NUM) it will issue lay-off notices this year if low prices persist for the steel-making ingredient, the union's general secretary said on Wednesday.

"The price has put them in dire straights and there is a prospect of them issuing a Section 189 notice at Sishen mine," NUM General Secretary David Sipunzi told Reuters.

He was referring to the regulatory process South African employers must follow before they lay off staff.

"They have been trying to sensitise us to this possibility. If the price remains like this for a few months they will have no choice but to issue a Section 189," he said.

Officials from Kumba were not immediately available for comment.

The group has said it plans to reconfigure its Sishen mine, the largest iron ore operation in Africa, and was targeting 2016 production there of 26 million tonnes, down from a previous guidance of 36 million tonnes.

Lay-offs are a politically thorny issue in South Africa, where the jobless rate is around 25 percent and local elections are expected this year. The NUM is also a key political ally of the ruling African National Congress (ANC).

Sipunzi said he expected to see more lay-off notices this year from other sectors but the union wanted to work with companies to find ways to minimise job cuts.

In line with other commodities, prices for iron ore have been sliding due to oversupply and and slowing economic growth in China, the world's bigest metals consumer.

Mining giant BHP Billiton said on Wednesday that it saw no recovery in iron ore or coal prices in the next few years.