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Sallies prepares for job cuts at Witkop
July 3, 2009
By Justin Brown
Sallies workers will be the latest casualties of the tide of job losses in the mining industry, after the company said yesterday that it had stopped production at its Witkop fluorspar mine due to slow demand.
Although the company did not give a specific number of people to be laid off out of its 300 workers, it said some employees would definitely lose their jobs.
"The effort to close the mine could have severe consequences for the local community, as well as for possible future mining activities at the mine," said Solidarity union.
The number of jobs lost in the mining sector over the past year as a result of the global financial crisis has reached nearly 35 500.
Major job cuts in the sector have taken place at Anglo Platinum (10 000 jobs lost), the clay mining and brick making sector (8 200), Lonmin (6 440) and Aquarius Platinum (1 912).
On the basis that 10 people rely on the income of each job, these job losses mean at least 355 000 people have lost their livelihoods.
A report by Johannesburg-based Southern African Resource Water group predicts that over the next year mining output, as well as employment, would decrease by 20 percent.
"This could mean the loss of about 100 000 jobs within the next year," says the report.
However, Jaco Kleynhans, the spokesman for Solidarity, said the number of restructuring notices in the mining and resources sectors appeared to be slowing.
Before the Sallies job cuts announcement, the union had received retrenchment notices from two other major companies last month.
Highveld Steel and Vanadium announced at the beginning of last month that it could shed up to 300 jobs out of 2 500, while BHP Billiton Hotzel mine said two weeks later that 150 jobs out of 950 were at risk.
Kleynhans said he was not aware of any other major firms that were looking at retrenching workers.
Tom Dale, the chief executive of Sallies, said the firm remained a going concern despite the fact that it had no mines left in operation.
Last Friday it announced the suspension of the Witkop mine. The operation produces fluorspar, which is used for making hydrofluoric acid and in manufacturing steel.
The company said: "New demand for acid-grade fluorspar has collapsed and, despite concerted efforts by management and its marketing agent, Witkop has been unable to secure future orders.
"Because the fixed component of costs in mining businesses in general is high, a cutback of production normally results in escalation of unit costs.
"This has been confirmed in the specific case of Witkop by in-depth analyses, and thus a reduction of output as opposed to a suspension of production does not appear to be a viable option for Witkop."
In the early afternoon yesterday the share price dropped 3c to 18c - the lowest level for the share since January 2004.
But it recovered to close 9.52 percent lower at 19c.
A year ago the share was valued at 81c.
Its lowest level ever was when the share hit 15c a number of times, most recently in November 2003.
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