Anglo Platinum’s announcement that it intends putting four shafts on long-term care and maintenance, and that it will sell another, amounts to something akin to a cold shower for the company, shareholders, employees — and sector administrators. As much as they might be necessary, downsizing exercises can be brutal, and as about a quarter of the workforce are going to be affected by this one, that is certainly the case here.
But what cannot be truthfully claimed is that this move comes as a surprise. Everybody is aware of the violent industrial action in the platinum industry last year. And yet, as searing as this experience was for the platinum industry, it isn’t its biggest problem.
It is yet another testament to the interconnected world we now live in that the industry’s biggest problem is actually the European car market. European air pollution laws are among the most stringent in the world and, consequently, the market for catalytic converters, which use platinum, is most significant in this region. And everybody knows the economic problems Europe has faced for almost four years now.
The extent of the problem in the European car market is only now becoming clear, and sadly it goes beyond mere economic malaise. European vehicle manufacturers said this week that demand for new cars in the region had fallen to the lowest in 17 years. The market has now contracted for five consecutive years. This is not likely to be the end of the problem; a further 5% decline is expected this year, and new car sales could even decline to 1993 levels over the next few years.
According to the Wall Street Journal, the cause of the problem is not only recession and higher taxes in Europe, but a long-running tendency for European drivers to drive less, and the increasing durability of modern cars. This problem has undermined the local platinum industry at exactly the same time as employees’ expectations have been skyrocketing after successive wage increases. Responsible trade unions have been warning their members of this trend and the threats associated with it, but they have been drowned out by unions trying to break into the tight labour system.
Anglo Platinum has tried to do what it can to mitigate the social effects of large-scale retrenchments by promising to try to provide training in new skills and create jobs for the same number of people who might be retrenched. But this news has been subsumed by an ugly squabble between the company and Mineral Resources Minister Susan Shabangu about the strange political etiquette involved in announcing bad news.
Anglo Platinum should arguably have been more diplomatic in the approach it took, but that would not change the reality on the ground, and there is obviously some political manipulation involved in Ms Shabangu’s outburst. The ministry itself cannot escape a degree of responsibility for the downsizing. Political rhetoric and changes to SA’s mining legislation have made the environment for extractive industries in SA uncertain, difficult and expensive.
The fact that new legislation is currently being considered that will make the industry even more beholden to the government, does not improve matters — and the company cannot be expected to ignore the political currents at Mangaung that appeared to suggest it will face increased taxation.
Put this all together and it is clearly disingenuous for the government to claim this move comes as a total surprise and is evidence of the "arrogance" of capital. The industry is not in command of the European car market, or the business cycle for that matter. What can be controlled is making sure that the effect on employees is minimised, and that the sector remains as productive and profitable as it can be under difficult circumstances.
That requires cool heads, rational thinking and a real attempt at mutual understanding — not hissy fits over secondary issues.