Kumba Iron Ore, a business unit of Anglo American will cut a total of 3,933 jobs as part of its plan to restructure the Sishen mine located in central South Africa in Kathu, Northern Cape.

The company began its retrenchment consultation process which will affect the employees and contractors working at the iron ore mine.

Kumba Iron Ore has already started the consultation process as per the section 189 and 189A of the Labour Relations Act on workforce reductions for 1,300 contractors and plans to extend it to 2,633 direct employees.

Weak iron ore prices, increased capital costs and higher operating expenses, have prompted the company to begin with the process which follows a decision to restructure Sishen mine to a lower cost pit configuration.

“We are engaging with companies to try and see how best we can deal with that situation in a responsible way.”

As part of the new mine plan, areas with high strip ratios will be excluded, resulting in less waste needed to be mined and a decreased level of iron ore production.

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The plan will reduce mining and production activities. In addition it necessitates a re-evaluation of the equipment and workforce needed to support a smaller operation.

Kumba Iron Ore CEO Norman Mbazima said: “This has been an extremely difficult decision but, after exhausting all other avenues and doing all we could have done to reduce costs, we have no choice but to take more significant steps to preserve the viability of the mine.

“We are mindful of the sensitivity that this situation demands, and are committed to supporting all our employees at Sishen, as we have done throughout the other restructuring processes at Kumba.”

The company’s latest announcement comes as South Africa’s mining sector is facing 32,000 job losses due to a fall in commodity prices.

South African Mineral Resources Minister Mosebenzi Zwane was quoted by Bloomberg as saying: “Commodity prices have fallen for quite some time and that is causing problems in term of jobs and restructuring.”

“We are engaging with companies to try and see how best we can deal with that situation in a responsible way.”

Mining industry is believed to employ over 400,000 people and contributes around 7% to Africa’s economy.

In order to cope with sinking commodity prices, the mining companies warned that they are prepared to cut costs and close troubled mines.

Image: Sishen iron ore mine is located in central South Africa in Kathu, Northern Cape. Photo: courtesy of Anglo American.