Village Main Reef says it will retrench some workers

South African gold miner Village Main Reef has begun steps to retrench workers at its Tau Lekoa mine, Kopanang mine and West Gold Plant, it said on Thursday, as the spread of the coronavirus and nationwide lockdown take their toll.

The unlisted miner, controlled by China-based parent company Heaven Sent Gold, said it had issued a notice of potential job cuts but could not say how many jobs would be lost. It said it hoped to avoid as many as possible.

The National Union of Mineworkers (NUM) said as many as 6 309 workers could lose their jobs. It said it had not been properly consulted and had called on the mines ministry to intervene.

“This inhumane brutality happens at the time when the country is fighting the spread of COVID-19 and the government has issued numerous calls to companies to do all within its powers to save jobs,” the NUM said in a statement.

Job cuts are a politically sensitive issue in South Africa, where unemployment stands at around 29%. The mining sector employs around 450 000 people, according to 2019 figures from the Mineral Council industry body.

Village Main Reef said a turnaround strategy it began in February aimed at improving operational efficiency had been interrupted by the outbreak of COVID-19 and the subsequent lockdown.

“Both of our mines Tau Lekoa and Kopanang were forced into care and maintenance. After serious discussion, the company has had to make the difficult decision to issue the section 189 notice, while keeping the mines on care and maintenance due to genuine health and safety concerns,” it said in an email to Reuters.

A section 189 notice is a notification of retrenchments under the country’s labour laws.

South Africa said last week it would let mines operate at up to half capacity after previously ordering most underground mines and furnaces to be put on care and maintenance, apart from coal mines supplying state power utility Eskom.

South Africa‘s lockdown, which started on March 27 and has been extended until the end of April, has impacted global commodities markets since several local miners have cut production plans or declared force majeure, which exonerates them from contractual obligations.