Union calls Seriti’s retrenchment bid a ‘declaration of war’

More than 1,100 jobs are on the line as coal miner Seriti Resources seeks to restructure its operations, which it says are not commercially sustainable.

The move has angered unions, which described it as a “declaration of war” that would push long-suffering members into poverty.

Seriti, which operates six large-scale, opencast and underground thermal coal mines, predominately supplying Eskom power stations, said its multiproduct operations at Middelburg Mine Services (MMS) and at Klipspruit South-East pit, together with related opencast activities at Klipspruit Opencast, “are not currently commercially sustainable and require material restructuring to improve unit costs and the prospects of future sustainability”.

These mines were negatively affected by, among other things, Transnet’s underperformance and general market volatility, the coal miner said.

“A single section 189A consultation process — under the auspices of the Commission for Conciliation, Mediation and Arbitration — commenced on September 16 2024 and is expected, in the aggregate, to affect up to 1,241 roles, of which 1,137 employees are likely to be retrenched across MMS, Klipspruit operations and our corporate services team, which is to be resized to service a smaller base of operational mines,” Seriti CEO Mike Teke said.

“We recognise that this exercise will negatively impact our workforce and local communities. We have not taken this step lightly. We will continue to engage openly and constructively with our employees and organised labour to ensure the best outcome for all concerned,” Teke said.

Seriti remained committed to honouring its coal supply obligations to Eskom, inland customers and the export markets.

Coal prices have fallen off record highs above $450/tonne reached in 2022 after Russia’s invasion of Ukraine to current levels of about $113/tonne.

Seriti’s move follows interim results released by Glencore in August in which the world’s biggest commodities trading company said that a combination of subdued coal prices and logistical woes in SA would impair $661m (R11bn) in the SA coal business — more than the $597m in revenue from the business in the period under review.

Glencore, worth nearly R1.3-trillion on the JSE, has been progressively cutting back on coal production in SA in response to rail constraints affecting exports. It said it would increase production rates “as and when additional rail capacity is restored”.

A recent study by consulting firm Boston Consulting Group states that high energy costs are damaging SA’s mining industry, which accounts for about 8% of GDP. It noted SA was grappling with a 4GW-5GW energy supply shortfall as a result of Eskom’s failure to invest in new capacity over an extended period.

The ANC-aligned National Union of Mineworkers (NUM) said it would mobilise its members for the “mother of all strikes” against Seriti’s retrenchment plan.

The union, which is an affiliate of labour federation Cosatu, a key ANC ally, said it would engage mineral & petroleum resources minister Gwede Mantashe to intervene and save jobs.

On Tuesday, NUM highveld regional chair Malekutu Bizzah Motubatse said the union was angered by the “total disrespect and impulsive decision taken by Seriti Resources to retrench 1,143 workers”.

“The company wants to replace permanent employees with contractors. This is [a] declaration of war. We will be meeting our shop stewards from next week Thursday.

“We are mobilising for the mother of all strikes,” Motubatse said, adding NUM represented about 3,000 of Seriti’s estimated 5,000-strong workforce.

“The NUM is making a clarion call to Seriti Resources that if it is unable to run and operate these operations, Seriti must sell them to mining companies that have respect for the unions and the workers.

“We are optimistic that minister Gwede Mantashe will assist as the level of unemployment in the country is very high. We cannot allow Seriti Resources to sleep and the moment they wake up, they retrench,” Motubatse said.

Association of Mineworkers and Construction Union general secretary Jeff Mphahlele said they would chart a way forward.

In February, labour unions spoke out against looming job cuts in the mining sector, saying the retrenchments appeared planned and co-ordinated as miners sought to reduce costs amid falling commodity prices and persistent power cuts.

Anglo American Platinum announced in February it had started talks that were likely to result in 3,700 workers (about 17% of its workforce) losing their jobs across its platinum mining business as it seeks to cut costs by R5bn. It said contracts with 620 service providers would be reviewed.

Kumba Iron Ore, which is also part of the Anglo American stable, said at the time 490 workers were at risk and contracts with service providers were under review as the world’s fifth-biggest producer of the steel ingredient seeks to cut costs by at least R2.5bn.

In December, Sibanye-Stillwater announced it had concluded retrenchments at its Kloof 4 gold mine shaft in Gauteng, which resulted in 1,057 workers accepting transfers to its other SA gold operations, while 550 at Kloof 4 were granted voluntary severance packages and 348 across its SA gold operations took early retirement packages.

Mantashe said in July: “While the mining sector employs 489,000 mineworkers, we have noted with concern the recent retrenchments, specifically in the platinum sector.

“In response to these job losses, we have pulled our social partners together and are in discussions to craft an approach to minimise them.”

Update: September 17 2024
This story has been updated with new comment and information.

mkentanel@businesslive.co.za