SA’s mining industry shed almost 7,000 jobs in the second quarter, reflecting a wave of restructurings and retrenchments over the past year as falling prices of platinum group metals (PGMs), rising input costs and logistical challenges continue to weigh on mining companies.
The sharp drop in mining jobs in the past quarter, more than double that of the first three months of the year, took total employment in the industry to 472,000 at end-June, down 1.5% from the midpoint of last year.
The implied loss of nearly 10,000 mining jobs in the first half of the year came after job cuts early this year and towards the end of last year, Minerals Council SA chief economist Hugo Pienaar said.
“Though there was already talk of significant mining job losses in the second half of 2023, the formal processes were only concluded earlier this year,” Pienaar said, with the adverse impact on jobs now being reflected in the data.
Retrenchments have been seen across the mining industry, with the biggest contribution coming from the PGM sector. According to the World Platinum Investment Council, the sector has reduced its global headcount by about 10,000 workers this year.
The PGM sector has come under a huge pressure from low commodity prices as the rise of electric vehicles brought future demand for the metals, which are primarily used in internal-combustion engines, into question.
PGM miners already had high fixed costs, Anchor Capital investment analyst Seleho Tsatsi said, so declines in PGM prices had severely affected margins and thus earnings.
Lost jobs
After a 35% drop in the PGM dollar basket price last year Anglo American Platinum (Amplats) reported a 71% drop in profit for its 2023 financial year. In February, the group began a process to retrench 3,700 employees, hoping to reduce its costs by R5bn.
Impala Platinum (Implats) also restructured its operations in the first half of the year and fired 4,000 workers, while 2,500 more lost their jobs at Sibanye-Stillwater’s PGM operations in SA.
“Given that the PGM sector is by far the biggest employer in mining — contributing 183,000 of the 479,000 total mining jobs in 2023 — the ongoing uncertainty about future vehicle demand for PGMs remains a big concern,” Pienaar said.
On top of declining commodity prices, SA mining companies have been under pressure from rising power costs, which emerged as the primary driver of mining input cost inflation in recent months. Electricity cost inflation in July was nearly three times the month’s producer price inflation figure, the Minerals Council SA said, indicating that “the cost trajectory remains a concern”.
“We need to guard against any measures that have the potential to postpone a recovery in mining production and employment,” Pienaar said. “Among these, Eskom’s application to increase electricity tariffs by more than 36% from April 2025 comes to mind. Such an increase will be untenable, both for energy-intensive sectors such as mining and for households.”
Logistics also continue to be a constraint on SA’s mining industry, particularly for iron ore and coal mining companies. Kumba, SA’s largest iron ore producer, announced plans to cut 490 jobs earlier this year as it seeks to cut costs by R2.5bn, while scaling down production in line with Transnet’s logistics underperformance.
Transnet’s inefficiencies also caused thermal coal miner Seriti Resources to announce plans this month to retrench more than 1,000 workers as it restructures its operations.
“In the bulk commodity space, the slow, albeit welcome, improvement in Transnet’s operational performance suggests that the likes of coal and iron ore mining companies will not be expanding capacity and adding to their workforce soon,” Pienaar said.
Still, he is optimistic about recent improvements in the domestic macroeconomic environment, “which bodes well for improved employment prospects in SA mining”.
The absence of load-shedding since late March, a slowing rate of inflation, interest rate cuts and improved investor, business and consumer confidence after the formation of the government of national unity had contributed to more conducive macro conditions, Pienaar said.
In addition, the fast-tracked implementation of the online mining cadastre “that includes processes to, among others, remove the double-granting of exploration and mining rights” would encourage a more mining-friendly regulatory environment.
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