South Africa’s mining industry, unions and the government have committed to a broad plan to stem job losses, including boosting platinum by promoting the metal as a central bank reserve asset, according to a draft agreement seen by Reuters on Wednesday.
The parties also said they would strive to delay lay-offs, sell distressed mining assets instead of closing them, and look at ways of streamlining the legal process which employers must follow to cut jobs.
The mining industry, which contributes around 7 percent to Africa’s most developed economy, is struggling with sinking commodity prices, rising costs and labour unrest, forcing a number of companies into mine closures and layoffs.
The agreement is expected to be signed on Monday next week after its details were hammered out on Tuesday.
The draft agreement lays out 10 wide interventions including getting the BRICS group of emerging nations to hold “platinum as a reserve asset” – like gold – in their central banks. Brazil, Russia, India, China and South Africa comprise the BRICS.
South Africa sits on close to 80 percent of the world’s known reserves of platinum, a metal used in emissions-capping catalytic converters which is facing depressed demand.
Its spot price is pinned near 5-1/2 year lows below $1,000 an ounce.
The gravity of the situation faced by South Africa’s mining sector was outlined on Aug. 5 – when the meetings over the jobs crisis began – by Roger Baxter, head of the Chamber of Mines. He said over 50 percent of the country’s mines were currently operating at a loss, according to minutes seen by Reuters.
In an apparent compromise to industry, the parties have also agreed to look at ways to streamline the legal process which companies must follow before they lay off workers.
Mining companies, including Glencore, Kumba Iron Ore, Sibanye Gold and Lonmin, have said they plan to cut jobs but are facing pressure from unions and the government to maintain jobs.
South Africa’s unemployment rate is around 25 percent and data on Tuesday showed the economy contracted in the second quarter.