Anglo American Platinum (AMSJ.J) said on Monday it plans to cut thousands of jobs at its mines in South Africa after profit plunged by 71% last year.
The company said in a statement that it is embarking on a restructuring that could affect about 3,700 jobs at its South African operations, or 17% of the Anglo American (AAL.L) unit's workforce, as it battles to keep a lid on costs after a slide in the price of platinum-group metals.
More broadly, South Africa's PGM miners, which produce around 70% of global mined platinum output, could cut as many as 7,000 jobs as they restructure unprofitable production, according to the country's Mineral Council.
The miner is also reviewing contracts with 620 service providers, Amplats said.
The restructuring decision "has not been taken lightly" CEO Craig Miller said.
"It's very much a last resort, not least as we recognise the unemployment challenges in South Africa and the socio-economic impact that the proposed restructuring may have on our people and the communities we are part of," Miller said on a conference call.
The Johannesburg-based firm said its profit slumped to 14 billion rand ($741.81 million) in the year ended Dec.31 compared to 48.8 billion rand the previous year. Amplats slashed its dividend by 81%, to 21.30 rand per share, still within its payout ratio of 40% of headline earnings.
Amplats' South African peers Sibanye Stillwater (SSWJ.J) and Impala Platinum (IMPJ.J) are also planning to cut jobs due to the fall in metal prices, with palladium and rhodium down 37% and 58% last year, respectively.
Anglo American CEO Duncan Wanblad told Reuters earlier this month that the group was considering deeper cost-cutting measures if market conditions did not improve, after announcing in December sweeping cuts to save about $1.8 billion by 2026.
As part of the measures, Amplats is postponing planned projects at its Amandelbult complex, it said.
Most of the affected jobs are at the Amandelbult operation, which had a challenging period last year, Miller said. He declined to say whether Amplats would consider selling Amandelbult.
The platinum miner is targeting a combined 10 billion rand in savings this year by reducing costs and postponing planned expansion projects.
Amplats would continue to focus on driving efficiencies and could consider additional "appropriate responses" if metals prices weaken further.
It will also place its Mortimer smelter on care and maintenance from the middle of this year, saving about 3.5 billion rand over the next three years, Miller said.
($1 = 18.8727 rand)
