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South Africa miners want to ramp up capacity as profits prove elusive

Companies lobby government to allow more production.
Miners battle high costs, disruptions amid low output. Image: Supplied

South Africa’s underground miners say operating at half capacity during the coronavirus lockdown is unsustainable, with costs higher than returns, and are lobbying the government to allow them to ramp up output or risk mine closures.

South Africa — the world’s biggest producer of platinum and chrome ore and a leading producer of gold and diamonds — allowed underground mines to restart operations at half capacity in April.

Read: Platinum giant say lockdown in SA risks killing mines

South Africa mining faces 45 000 job losses on extended lockdown

However, AngloGold Ashanti spokesman Stewart Bailey said volumes were important as mines have a high fixed-cost base of around 70% or more of total expenses, incurred regardless of the level of production.

Sibanye-Stillwater Chief Executive Officer Neal Froneman said operating at 50% capacity was not sustainable “because you are effectively operating at a loss”.

“We would rather not operate and keep our operations on care and maintenance if government does not increase the allowed capacity soon.”

Sibanye-Stillwater’s platinum group metals (PGM) operations would need to operate at about 60-65% to break even, while its gold operations require even higher levels to make a profit, Froneman said.

If output is not ramped up, the industry — which employs around half a million people — could see shaft closures and restructurings, he added.

“Once mines close they don’t re-open easily,” said Froneman.

In labour-intensive mines where typically cramped work now has to be adapted to social distancing rules, half the workforce may produce 30-40% of normal output, the Minerals Council said.

Miners want the government to allow them to increase capacity, with Harmony Gold CEO Peter Steenkamp and Impala Platinum spokesman Johan Theron also saying the current situation was not sustainable for much longer.

The mines ministry could not immediately comment.

The government allowed open cast mines to operate at 100% capacity from May but according to draft plans drawn up in April underground miners are unlikely to be allowed to resume full capacity operations before June at the earliest.

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I don’t know what is worse for the mining industry, the Mining Charter or lockdown. The Mining Charters ensures that the minerals stay underground and lockdown forces workers to remain above ground. The ANC is a communist barrier between the largest deposits of mineral wealth on earth and the largest pool of unemployed mineworkers on earth.

Instead of alleviating “inequality”, as communism is supposed to do, it amplifies inequality. The ANC builds a new wealthy class of capitalist, the Bourgeoisie, the members of Cosatu and NUMSA who enjoy a monopoly on job security, while they condemn the working class to a life of poverty. Socialism and communism enable the scum of the earth to rise to the top and to trample on the rights of others.

While capitalism is only sustainable if it spreads wealth and serves the consumer, the process of communism creates a small, wealthy political elite who rule over mass poverty and abuse the consumer. Communism has run its course in South Africa. We have become the typical communist “eutopia”.

End of comments.

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