South African coal mining company Seriti Resources has announced plans to cut as many as 1,137 jobs across two of its opencast coal operations due to unprofitability.

The company said that the MMS and Klipspruit South-East mines are not currently commercially sustainable. These mines require material restructuring to enhance unit costs and return to profitability.

The decision to trim the headcount comes as Seriti faces challenges including poor performance from the state-owned rail company Transnet SOC, as well as market volatility.

These factors have hindered the company's ability to capitalise on increased European demand for coal following Russia's invasion of Ukraine, reported Bloomberg News.

Transnet's diminished coal transport capacity to South Africa's primary export terminal has led to the lowest inland coal shipment levels in decades, affecting sales.

In response to these challenges, Seriti initiated a Section 189A process under the support of the Commission for Conciliation, Mediation and Arbitration (CCMA).

The process is expected to affect up to 1,241 roles with 1,137 employees potentially being laid off across MMS, Klipspruit operations and corporate services team.

However, Seriti has reaffirmed its commitment to fulfilling coal supply agreements with Eskom Holdings SOC, local customers and the export markets.

Seriti CEO Mike Teke said: “We recognise that this exercise will negatively impact our workforce and local communities. We have not taken this step lightly. We will continue to engage openly and constructively with our employees and organised labour to ensure the best outcome for all concerned.”

MMS includes two open-cast mining operations Middelburg North and Middelburg South.