JOHANNESBURG (miningweekly.com) – Mineral Resources Minister Ngoako Ramatlhodi says international mining giant Glencore should have looked at alternatives to retrenchments, including shifting workers to vacancies in other operations, before considering the potential retrenchment of about 1 000 workers.

The Department of Mineral Resources (DMR) levelled at the coal miner that the possible retrenchments would be "inhumane" and that it was not following legal procedure, revoking its mining licence for the Optimum Coal operation on Tuesday.

Speaking at an emergency meeting on Wednesday to curb the job losses in the local mining industry, Ramatlhodi noted that Glencore should have explored voluntary retrenchments, particularly with regard to older employees, who were due for retirement. “We are looking at rehabilitation to absorb some miners who might be retrenched from the direct operations,” he advised.

With the Association of Mineworkers and Construction Union’s (AMCU’s) and the National Union of Mineworkers’ rejection of South Africa’s gold producers’ final offer, as well as Glencore’s mining licence suspension, the outlook for job retention in the industry looked grim.

Ramatlhodi said involved parties, which included trade unions Solidarity and AMCU, as well as miners Anglo American Platinum, Harmony Gold and Optimum Coal, and the Chamber of Mines (CoM), needed to commit to a solution to rescue the local mining industry and facilitate job retention in the pressured sector.

CoM CEO Roger Baxter, who attended the meeting along with CoM president Mike Teke and VPs Graham Briggs and Andile Sangqu, said the multistakeholder meeting was constructive and came at a "critical juncture" as mining companies were facing a perfect storm of weak commodity prices and spiralling costs.

"The mining industry is supportive of collaboration between all stakeholders, ensuring that the mining industry continues to play a fundamental wealth-creation role in South Africa. Simply put, mining matters for South Africa,” he stated.

The CoM committed to participating in a number of task teams that had been established to come up with practical short- and medium-term interventions for the mining sector. The task teams would report back to the leadership group towards the end of next week.

Following the suspension of its mining licence, Glencore announced on Tuesday that the directors of its subsidiaries, Optimum Coal Holdings and Optimum Coal Mine, had resolved to begin business rescue proceedings under joint business rescue practitioners Peter van der Steen and Piers Marsden.

Speaking to Mining Weekly Online on the sidelines of Wednesday’s meeting, Solidarity general secretary Gideon du Plessis said the trade union did not hold high hopes for the two-day discussion. “All the meetings that we have been in, so far, have involved a lot of grand standing, positioning and ideological rhetoric. Hopefully today we can make progress.”

Du Plessis added that it was ironic that the Minister pulled the mining licence in an effort to save jobs, labelling it “a show of power”.

Opposition party Democratic Alliance echoed this sentiment, stating that the African National Congress needed to realise that if it tried to strongarm business, there would soon be no businesses left to strongarm.

“Further, the question needs to be asked: ‘If Minister Ramatlhodi shuts down this coal mine, where does he think Eskom will get the coal it needs to run Hendrina power station?’ If the Minister continues to try and strongarm the industry into maintaining uneconomic mines, then the stream of job losses risks becoming a flood,” DA Shadow Minister of Mineral Resources James Lorimer stressed in a statement.

“It’s a pity that State-owned power utility Eskom is not here, because a lot of the impact caused by the country’s unreliable electricity supply and the new winter tariffs relates to the mining industry,” noted Du Plessis.

Optimum had been conducting extensive discussion with Eskom to renegotiate an agreement signed in 1993 to supply 5.5-million tons of coal a year to Eskom. However, the utility had made clear its unwillingness to do so, opting instead to serve a notice in which it asserted its rights to claim significant historical specification penalties from Optimum and impose future penalties.

Glencore stated in a media release that Optimum had been supplying coal to Eskom at a price “significantly less than the cost of production” for a prolonged period.

But now Eskom sought penalties, which would result in Optimum supplying coal to the State utility at an effective price of R1/t.

Ramatlhodi stated that the meeting was about “jobs, jobs, jobs” and not an exercise in fingerpointing.