South Africa lets Glencore resume operations at Optimum coal mine
South Africa's mines minister has decided to conditionally withdrew a licence suspension for Glencore's (LON:GLEN) Optimum coal mine, ordered earlier this week.
Minister Ngoako Ramatlhodi had ordered the mining and commodities trading giant to stop operations at the mine because of what he qualified as an “inhumane” way to cut jobs.
The company, one of the biggest exporters of South African coal, announced in July it would cut 380 jobs at Optimum and shut part of the mine as coal prices slumped 32% since the start of 2014.
But Glencore said it had complied with all legal requirements relating to job cuts, including consultation with the government and unions for an extended period of time.
On Tuesday, only a day after its Optimum mine’s licence was suspended, the Switzerland-based miner and commodities trader placed it in the local equivalent of bankruptcy proceedings. It said the main reason was that it was supplying state utility Eskom with coal at prices lower than the cost of production and that the power firm was not willing to renegotiate the two-decades old supply agreement.
Today’s decision follows discussions with authorities department in which the company “demonstrated that it had complied with all legal requirements in respect of the retrenchment process and the conditions of its mining right,” according to a report on Jaracanda FM Radio.
In December last year, Glencore temporarily shut all of its Australian coal mines, as a way to offset a global oversupply of the commodity and fight declining prices.