At first glance, Amplats decision to only lay off 6K workers rather that 14K workers may look like a drastic watering down of prior plans. It isn't. There is a good chance it will impact Pd. prices much more than it looks like today.
1) Though, the number of jobs cut is less than half of what was announced in January, the actual shaft consolidation and capacity cut has not changed much. Some are saying that the original 14K was intentionally over-estimated to leave the appearance of negotiating. Others are expecting Amplats will continue reduce work force gradually, as attrition is very high at the mines. They can simply not re-hire until they reach their planned goals.
2) The planned reduction in capacity would result in more than a 100K less ounces of Pd in 2013 and more than 150K less Pd in following years. JM comes out with their 2013 PGM projections next week. Currently, analysts has been predicting anywhere between a 600K to 1 million ounce Pd deficit. Some projections already bake this in. But still, it represent 10%-15% less Pd. on the market this year, and even less in following years.
3) The potential for union reactivity (i.e. strikes) is high.
3a) AMCU has been angry from the get-go about the lay-offs. When 14,000 was mentioned in January, they threatened "the mother of all strike" that "will bring the company to it's knees". They are angry that Amplats used the media rather than working with them directly. Once they get official conformation, they say they will bring it to there members over the week-end to decide what action to take. Though, some members have already voiced their intention to fight.
3b) NUM is also less than pleased and ready to fight.
"This is a declaration of war," said National Union of Mineworkers (NUM) spokesman Lesiba Seshoka after the company's announcement.
"The union intended approaching the Commission for Conciliation, Mediation, and Arbitration to declare a dispute, and it would strike."
big you got some good points and I really think they are very valid.
As you know I have been following SA now for a couple of years and have never ceased to be amazed at how many times they come to going over the edge. As I have said "they have one foot over the grave and another on a banana peel". But they always to blunder along.
The big thing thing with their mines , and especially AMPLATS, is they can surge production by increasing blasting and overtime. This has to do with the heavy manual mining they have to do becasue of the geology there. (Refer to Mining Web for an very detailed article last year on this all). So actually the number of "workers" they have quantity wise does not necessaryily translate into the production quality wise. As you coreectly note above, the attrition/abscene rates are very high.
But by selecting and keeping the good workers and giving them the "famous overtime vouchers" on Sat they can actually produce more. The question becomes at what profit/cost.
They will not be producing more if they go through with shutting down shafts.
Per their own PR
"Should these revised proposals be implemented, Anglo American Platinum’s Rustenburg operations will be reconfigured as a sustainable 320,000 - 350,000 ounces per annumplatinum producer in the medium term."
Maybe it won't end up to be quite that much. But you don't but that kind of PR out for your shareholders to read, if you are not planning significant reductions.