Hammered by Eskom’s load shedding and logistics constraints under Transnet, Kumba Iron Ore is laying off 490 employees under a restructuring program that will see the Anglo American-owned company reduce its production from 2024 to 2026.
The logistical constraints and load shedding experienced during 2023 had raised the “cost of doing business in South Africa,” Kumba Iron Ore said on Tuesday.the company was now “re-configuring” its operations.
"The potential reconfiguration of our business is expected to impact 490 jobs including fixed-term employees across Kumba's operations,” said Kumba Iron Ore chief executive, Mpumi Zikalala.
The company was now embarking on Section 189A processes involving consultations with trade unions and affected employees.
The company had already streamlined office-based roles in 2023 and, it said, “given the required change to our production footprint in the medium term, we do also need to reconfigure” the size of the workforce.
Kumba Iron Ore said it has together with other members of the Ore User's Forum suffered significant losses due to derailments and logistics infrastructure and equipment failures over the past few years.
The issues had continued in the past year. In order to re-balance its value chain, the company had decided to “slowdown overall production in the fourth quarter of 2023” after “product stockpiles” peaked at unsustainable levels.
Resultantly, production for 2023 full year had fallen by 5.3% to 35.7 million tonnes although sales increased by 1.6% to 37.2 million tonnes compared to the previous year “when industrial action at Transnet disrupted rail and port” operations.
“Logistics challenges will, however, take some time to resolve and unless we act now to align our production and cost base to current logistics constraints, this business will not have the resilience it needs to deliver across its stakeholders.”
BUSINESS REPORT