Corporate Restructuring & The Community: The South African Mining Sector

An embattled mining company had to commence a restructuring process which would involve mass retrenchments.

The Problems:

The company was by far the biggest employer in an area of high unemployment, so it was deeply concerned about the knock-on effects in the community as a result of the mass retrenchments. The company’s precarious financial position also meant that any disruption of operations (like strikes or legal challenges) would place the company in financial distress. 

Our Solution:

Our brief was to work with the company’s legal and management teams to manage relationships between the Department of Mineral Resources (DMR), local government, the community, and participating unions.

Because we were embedded within the management team at an early stage, we drafted the key s.189 consultation document, and advised on the format of the retrenchment process. This notice sets out all the steps taken to avoid retrenchments, and explains why the company is being forced to take certain actions.

We also provided real time advice, in person and on the phone, to the company during its negotiations with two unions (Association of Mineworkers and Construction Union (AMCU) and National Union of Mineworkers (NUM)). Ultimately, the company received the blessing of the Commission for Conciliation, Mediation, and Arbitration (CCMA).

During the process, we became aware that there was the potential for violent community unrest directed at the mine. As a result, we recommended a meeting between the community and the Chairman of the Board, in order to address the effects of the restructuring.  This meeting, and others we organised, allayed community concerns and averted violent unrest.

The Outcome:

We were instrumental in helping the company avoid disruption of operations and successful legal challenges, and to survive the restructuring process. Operations continued unchecked without strikes or community picketing, and while there was a legal challenge by one of the unions, it was unsuccessful.