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140 Jobs Gone

Wednesday, 23rd March, 2016

Perilya’s Managing Director, Paul Arndt Perilya’s Managing Director, Paul Arndt

By By Andrew Robertson

Up to 140 mine jobs will be axed immediately as Perilya moves to reduce production and reliance on its Southern Operation. 

The struggling company ended weeks of speculation yesterday by confirming between 90 and 100 employees would be made redundant from today along with another 40 contractor positions.

Managing director Paul Arndt said the job cuts were not isolated to any one area of the mine, which will see its workforce slashed to about 360.

The cuts affect about 70 people employed under the mine’s enterprise bargaining agreement and another 20 who are employed as staff.

Around a third of the jobs to go, or 34 positions, will be through voluntary redundancy after 40 workers applied for a VR prior to yesterday’s announcement.   

Mr Arndt, who delivered the news to workers yesterday, said south production would immediately move to about 70 per cent of its current rate, or about 7,000 tonnes of contained metal per month, and a slightly higher grade.

“That in our view (gives) us the best chance in terms of going forward ... with Potosi (mine) to handle the low metal price environment and also in effect give us the best potential to extend the life of the operation,” he said.

Mr Arndt expected the new operation plan to result in the mine breaking even in terms of cash flow in the near future, after redundancies were paid.

Yesterday’s announcement was the culmination of a process that began in September to resize the loss-making operation in the wake of low metal prices.

After considering a number of options, management got the green light to proceed with its preferred proposal from Perilya’s board on Monday.

It then moved swiftly to implement the plan.

Production at the mine was halted yesterday for 24 hours and a mass meeting of employees was held at 7am. Workers were told production was being cut to reduce costs and, as a result, jobs had to go.

Following the meeting, employees were broken up into groups and given one of two letters - one advising them that their position had been retained, or another informing them that their position was likely to be made redundant.

Nineteen workers were given until yesterday afternoon to accept or reject “alternative roles” which, in some cases, involved a cut in wage.

“If they are not prepared to accept it then the likely outcome is that person will likely be made redundant,” Mr Arndt said.

“If they are prepared to accept it then they have a new job that they are undertaking.”

Those who received a redundancy letter have an opportunity to discuss any “extenuating circumstances” with the company today, according to Mr Arndt.

“At the end of that discussion, that person is likely to receive a letter in relation to either confirming that redundancy or not.

“So we anticipate by (tonight) everybody will know their new roles or whether they’ve been made redundant or they haven’t been made redundant.”

He believed the job cuts would not have come as a surprise to employees as the company had been communicating its position to them over a number of months.

As recently as last week it had asked people for ideas to improve the operation which lost $30 million last year.

“It’s a really difficult metal price environment,” Mr Arndt said.

“There’s certain metal prices where maintaining the current operational level gives you a better result but it’s a substantially higher metal price than today.       

“I think this is the right option for the time but it’s also the right option in terms of long term for the mine because this actually has the potential to extend the life of the Southern Operation.”

He said it was “really important for us” to get the North Mine up and running but that transition meant in the short term Potosi would now be making up about 40 per cent of Perilya’s total production in Broken Hill, up from 20-25 per cent.

“As we can get into the deep parts of the North Mine you’ll see the North Mine will be the primary operation and the Southern will be the secondary feeder.”

Under that scenario, Southern Operation could even be extended out to 2030.

“But all this is subject to metal price; it is subject to the performance of the mine both in terms of how the grades and stopes hold up but also the productivity of people,” Mr Arndt said.

“For the people who got continued work ... it’s really, really important that people put in the best efforts that they can.

“We’re just trying to have a situation where we give the best chance that we can for this operation to run for a long time.”

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