Harmony bullish on deal to save Free State jobs
John Fraser
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HARMONY announced yesterday that it had achieved a ôsignificant breakthroughö in negotiations with its unions over the restructuring of its Free State operations.
The move could mean that job losses will be significantly below the 11780 workers who are potentially affected by the current restructuring.
Harmony had to implement the restructuring because of the strong randÆs effect on its marginal operations.
An original retrenchment process was halted after a court challenge by the unions, but a fresh process was launched on May 19.
Harmony has already cut 11000 jobs in the past 12 months.
Harmony said yesterday that it had reached agreement with two unions ù Solidarity and United Association of SA (UASA) ù on measures to limit the number of further job losses.
The measures have not been rejected by the National Union of Mineworkers (NUM), which has asked for more time.
The measures would involve transferring threatened employees to other operations, and to work currently carried out by contractors. Voluntary retrenchments would become an option.
However, a key concession by the unions had been the agreement to implement around-the-clock, seven-days-a-week mining, which Harmony calls continuous operations. This will happen at Tshepong, Bambanani and Masimong 5 shafts.
Details of the premium to be paid to the workers for adopting the new working practices remain to be fleshed out.
Merrill Lynch analyst David Hall said in a note dated June 10 and distributed to the media yesterday that a failure to implement continuous operations by Harmony in the Free State ômeans that 2700 jobs created now have to be unwoundö.
ôThe direct cost of carrying the extra employees is R45m a month. A significant portion of the workers expecting to be retrenched have been removed from production, and are sitting on (the) surface,ö Hall said.
Harmony said it expected to resume talks with the unions on Tuesday.
`We look forward to an amicable completion to the restructuring process that will allow for the creation of a more sustainable and prosperous industry, which can benefit all stakeholders and affected parties,ö Harmony CE Bernard Swanepoel said.
In another development, Hall wrote that Harmony will break even on gold prices 8,7% lower than its previous target once it has retrenched as many as 9000 workers. He said the company will be profitable at a gold price of R84000/kg. Gold was trading yesterday at about R95000/kg.
The randÆs 77% gain against the dollar since the end of 2001 has slashed profits for mining companies which pay most costs in local currency while selling their metal for dollars.
Harmony has posted a loss before one-time items and goodwill amortisation in eight of the last nine quarters.
Harmony and other South African gold producers are involved in biennial wage talks, which may boost costs.
The NUM has demanded a pay increase of 20%.
The talks may end in a strike, Merrill said, citing Swanepoel. With Bloomberg
Mine wage deal links to CPI X : Page 16
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