Kumba Iron Ore has issued retrenchment notices that could affect 1,600 employees, despite bumper profits in the year to the end of December, trade union Solidarity has said.
KUMBA Iron Ore has issued retrenchment notices that could affect 1,600 employees, despite bumper profits in the year to the end of December, trade union Solidarity has said.
Solidarity’s deputy general secretary for mining, agriculture and chemical industry, Riaan Visser, said the process could result in 653 job losses.
Visser said Kumba’s reasons for the retrenchments had no grounds given the company’s strong financial performance in 2020.
“It is unfair and simply insensitive of Kumba to punish workers amid a pandemic and an excellent financial performance with increased turnover, profits and dividend declared,” Visser said.
Last month, Kumba, a subsidiary of Anglo American, delivered record earnings and dividends during the 12 months to the end of December on the back of 19 percent higher iron ore prices to $115 (about R1,765) a ton.
On Friday, Kumba, which owns the Sishen and Kolomela mines in the Northern Cape, confirmed that the company had initiated a targeted consultation process with the employees who might be affected.
Spokesperson Sinah Phochana said the numbers would be confirmed after the consultation process.
Phochana said the group had been on a business transformation journey in recent years, and had been implementing its strategy to enhance margins, extend the life of mines, manage costs, reduce the breakeven price and ensure sustainability.
“Our transformation journey includes deploying breakthrough technologies and new ways of working to become safer, cleaner, more productive and more competitive on the global stage, while driving demand for our quality ore.
“It also includes a targeted organisational restructure to ensure that the right work is done at the right time, in the right way by capable people in roles that are designed with clear accountabilities and authorities,” Phochana said.
In the year to the end of December, Kumba delivered R20.7 billion of free cash flow, which supported the board’s decision to declare a final cash dividend of R41.30 a share.
Combined with the interim cash dividend of R19.60 a share, the total cash dividend for the year increased by 30 percent to R60.90 a share, representing a payout ratio of 86 percent of headline earnings.
Visser said employees had worked throughout the Covid-19 pandemic crisis, their families had already been affected by retrenchments, and they were struggling to put food on the table.
“We understand that there are industries that are suffering terribly at the moment. However, it makes it that much worse when a mining giant such as Kumba wants to retrench employees after an excellent financial year.
With unemployment currently at the highest level in South Africa’s history, a business cannot justify such actions in any way. We will not tolerate it,” Visser said.
The mining company’s shares closed 8.24 percent higher at R678.65 on Friday.
– BUSINESS REPORT