LONDON (ShareCast) - Shares in UK-listed mining group Anglo American (LSE: AAL.L - news) had sunk into the red by Tuesday afternoon as its plans to mothball mines and cut jobs in Rustenburg prompted a backlash from South African politicians.
The market initially reacted positively to the proposed restructuring of Anglo American Platinum ('Amplats') on Tuesday morning. However, according to Miningweekly.com, South African Mineral Resources Minister Susan Shabangu has said that the government has been "blindsided" by the company's shake-up.
"The department regrets the behaviour by Anglo American on how the company relates and undermines the regulator on such important business decisions, which impact on the country's economy," she told reporters in Pretoria.
Anglo shares, which were trading around the 2,050p mark in the morning session, had dropped by 4.32% to 1,948.5p before the close in London.
DMR surprised by timing of Amplats review
Shabangu said that while Anglo had only spoken to the Department of Mineral Resources (Other OTC: MALRF - news) (DMR) less than seven days ago, it was expecting to consult with the company again before an announcement.
"There was never a consultation; there was a meeting with the outgoing [Anglo American] CEO [Cynthia Carroll] about the intention of restructuring...but it was agreed that they would come to us if they had a plan before going public," she said.
Unions "shocked" by job cuts
Amplats, which revealed that it had swung to a large loss in 2012 due to a two-month-long illegal strike and falling platinum prices, said that it has come up with a "clearly defined proposed strategy to create a sustainable, competitive and profitable platinum business for the long term benefit of all its stakeholders."
This strategy involves the "reconfiguration" of its Rustenburg operations, including putting four unsustainable, high-cost shafts on long-term care and maintenance. Meanwhile, it said that it is to sell its Union mines "at the right time".
"As a result of the proposed changes to the business, a total of up to 14,000 jobs may be affected, 13,000 of which will be in the Rustenburg area."
The National Union of Mineworkers (NUM) has expressed its intention to negotiate with Amplats, according to Miningmx.com, with a spokesman saying: "The NUM will engage the company in a bid to save these jobs and appeals on workers to work together to safeguard their own jobs."
As part of the review, Amplats said that it would target the creation of at least 14,000 jobs, focused on housing, infrastructure and small business development, but Shabangu wasn't convinced.
She said: "Looking at what has happened throughout history, in many cases where such programmes come in at the tail end, the affected people tended to get stuck in unemployment."