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Jan 19, 2009

Rockwell Diamonds to Retrench 500

RETRENCHMENTS in the diamond-mining industry seem to be on the increase due to the current economic conditions.

Trade union Solidarity received three Section 189 (retrenchments) notices from diamond companies last week.

According to these notices, nearly 500 employees could soon be retrenched at Rockwell Diamonds, Diamond Core Mining and Exploration, and Sandstraat Eksplorasie — which are all based in the Northern Cape.

Last month, the union received notices for retrenchments of more than 700 employees of Namakwa Diamonds and Petra Diamonds.

The latest additions bring the number of affected employees in the diamond industry to more than 1200.

On Friday, Business Times reported that diamond giant De Beers was mulling the retrenchment of 1415 employees, which the company denied.

On Friday afternoon, it confirmed that it planned to begin consultations with trade unions over job cuts at its six SA operations.

It said it would only know how many people would be affected by the job cuts once formal consultations got under way at each site.

Jaco Kleynhans, Solidarity’s spokesman, said even though companies were using the diamond prices as a reason for retrenchments, market prices were not exceptionally low.

He said: “Current diamond prices compare very favourably with those recorded in the first half of [last month]. However, October was an exceptionally good month for diamond prices and cannot really be used as a benchmark for prices in general.

“In this country, diamond mining is concentrated in the Northern Cape and these retrenchments will affect the community badly as there aren’t other opportunities.”

According to retrenchment notices sent to Solidarity by Rockwell Diamonds, the international diamond company that mines alluvial diamonds in the Northern Cape planned to retrench almost 55 percent of its approximately 640 employees.

Sandstraat Eksplorasie, a diamond exploration company in the Northern Cape, plans to retrench about 78 people — nearly two-thirds of its workforce.

Diamond Core Mining and Exploration also informed the union of its plans to retrench all 59 of its staff members and says that due to the overhead costs at the company, it is not economically viable to continue mining activities.

According to a Frost & Sullivan Growth Partnership Company’s mining analysis: “South African mining companies will have to place greater emphasis on efficiencies and cost containment this year, as the effects of the economic downturn continue to be felt on the commodities market.

“High cost marginal operations will be dropped as mines look to preserve cash and ensure profitability.”

Wonder Nyanjowa, Frost & Sullivan metals and mining analyst, said: “Resource prices are likely to pick up at the tail end of the second quarter once the global economic slowdown starts lifting, but not by the substantial margins that will spur increased production.”

Source : TheTimes
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