Glencore Mulling Shutdown of Some South African Coal Mining Operations

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Glencore mining

Diversified mining company Glencore is considering the closure of some of its coal-mining operations in South Africa, which would reduce its overall South African production by at least five-million saleable tons of coal a year and affect more than 1 000 employees, Mining Weekly said.

This announcement by the London-, Hong Kong- and Johannesburg-listed company, headed by CEO Ivan Glasenberg, follows a detailed review of its Optimum Coal subsidiary, which was initiated because of ongoing financial hardship at Optimum, arising from difficult market conditions and the continued deterioration of the export coal price, the report said.

Outlining that the proposed closure would affect about 1 070 employees, the company said in a media release that the affected areas included the Optimum opencast operations, large portions of the coal processing plants and associated support services, the website said.

Optimum produces 10-million tons of saleable coal a year from opencast and underground mines, half of it bought domestically by State-owned power utility Eskom and half of it exported, according to the report.

Optimum currently intends to retain the underground mining operations as well as sufficient processing capacity at Optimum to ensure the continued supply of coal to Eskom’s coal-fired Hendrina power station, the website said.

The affected operations would be placed on care and maintenance and considered for reopening if economic conditions improve, Mining Weekly said.

Glencore said that Optimum had informed the Department of Mineral Resources and relevant unions of the potential closures and would now enter into a Section 189 process with the recognized unions and employees to determine the settlement for all affected employees, the report said.

In addition, Optimum would ensure that the employee engagement process was conducted in line with applicable labour legislation, the website said.

Optimum would explore options for redeployment across the Glencore South African coal operations as well as putting in place support services for affected employees and their families, Mining Weekly said.

The company added that it was continuing to review all of its coal operations in the light of the prevailing negative economic climate, the report said.

Meanwhile, the strategy of increased production by big producers of iron ore has drawn criticism from within the mining industry, with Glencore’s Glasenberg saying that rising production is overwhelming demand, the Wall Street Journal said.

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