Anglo American’s chief executive has hinted that the mining titan is looking to offload its strike-hit South African platinum mines to concentrate on open-cast extraction.
The London-listed firm’s operations in South Africa’s platinum belt north of Johannesburg have been idle for close to three months, forcing the firm to dig into reserves and hitting its bottom line.
About 80,000 miners are on strike and have vowed not to return to the shafts until their minimum monthly wage is doubled to 12,500 rand, around $1,200.
Anglo American says that demand, if met, would wreck its platinum subsidiary.
“The Rustenburg resource is no longer what it used to be,” Mark Cutifani told newspaper Business Day in an interview published on Monday.
“I don’t think that’s where our best skills set sits.”
“That’s why I’ve been quite vocal saying we should consider taking a back step from Rustenburg.”
The area holds the largest platinum deposits in the world, but the mines are labour-intensive and often deep, making mechanisation costly and politically fraught.
“We should be focusing on the more mechanised operations which is what I think we do much better, and allow someone who has better skills set in those types of mines to run those kinds of assets,” Cutifani said.
Sibanye Gold, the largest producer of gold in the country, has indicated it is considering buying some platinum mines once the strike is resolved.
Talks between the company and the Association of Mineworkers and Construction workers (AMCU), which represents the striking workers have so far failed to end the dispute.
The world’s top platinum miner Amplats had warned in February of restructuring because its Rustenburg and Union mines, in the country’s north-western and northern regions, were “in the most marginal financial position.”
It then warned that “if the industrial action continues for much longer, we cannot rule out the need for further restructuring to ensure the long term sustainability of those mines.”
Amplats says the strike is costing it about $92 million or 4,000 ounces of platinum each day.