AngloGold Ashanti plans to cut staff through voluntary severance packages as the bullion producer feels the pinch of lower gold prices and rising costs.

According to a Bloomberg report, a union source close to negotiations with the company said 1 200 positions were affected in South Africa, with AngloGold considering moving 300 staff into other positions and laying off 900 employees.

Memo to unions

“We will attempt to decrease the workforce numbers,” the company said in the memo sent to unions, adding that all employees may apply for the packages, reported Reuters.

Applications will open on Tuesday and the company wants to cut jobs in overstaffed areas, with a preference given to employees who are over 55 years old, according to the memo.

The company, which has around 32 000 employees in South Africa, declined to provide details.

Severance packages

“We have offered voluntary severance packages to staff, which is part of our self-help measures we announced at our quarterly results to further reduce costs and enhance efficiency.” spokesman Chris Nthite told Bloomberg.

“As unions we now have to seriously consider our demands so we don’t aggravate a situation that can lead to more job losses,” said a union source.

Sharp fall in earnings

AngloGold Ashanti reported a sharp fall in third-quarter earnings earlier this month in the face of a lower gold price, inflationary pressures and higher tax charges.

The potential lay-offs come as gold dropped 1 percent to $1 145.50 an ounce, close to a 4-1/2-year low reached last week, before recovering slightly.

Another South African bullion producer Harmony Gold said earlier this month it might have to cut jobs as it contends with depressed prices and operational problems.

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