Mine may axe 6 900 jobs

It also said that gold production for the current quarter (Q3 F08) is forecast to decline by between 20% and 25% against the December quarter (Q2 F08), as a result of the total suspension of production for one full week due to power constraints, continued power rationing, and the seasonal impact of the Christmas break.

It confirmed that as a consequence of the 10% power reduction imposed by Eskom, sustainable production at Gold Fields' SA operations is likely to decline by between 15% and 20% from the June quarter (Q4 F08) onwards, as previously advised.

Eskom has indicated that the current quota of 90% of average historic electricity consumption will remain in force for at least five years, through to 2012.

Gold Fields said to achieve the 10% reduction in electricity consumption imposed by Eskom, the Number 6 and 7 shafts as well as the 9 shaft Depth Extension Project at Driefontein, and the Number 3 and 8 shafts at Kloof Gold Mine, are to be mothballed, closed or scaled back, potentially affecting approximately 4 900 employees at these two mines. Restructuring

South Deep Gold Mine is to be restructured as a result of the depletion of the Ventersdorp Contact Reef horizon above 95-level and a new strategy implemented which focuses primarily on the completion of the twin shaft infrastructure and development capital programmes. This too is unfortunately compounded by the power rationing.

The total number of South Deep employees potentially affected is approximately 2 000.

Production at Beatrix Gold Mine is unlikely to be affected by the reduction in power supply.

The total number of employees and contractors potentially affected at all of Gold Fields' SA mines is 6 900 out of a total employee population of 53 000, it said.

Engagement with all relevant stakeholders, including Unions and Associations, have commenced with a view to ameliorating the impact on affected employees. All alternatives will be considered to save jobs, including options such as early retirement, voluntary retrenchments, contractor replacement and redeployment elsewhere in the group.

Job losses

The National Union of Mineworkers however asked management to hold back on the issue of "section 189 letters" commencing formal retrenchment discussions, until the union had completed a series of meetings with government and the Chamber of Mines, scheduled for 26, 27 and 29 February.

Terence Goodlace, head of SA operations for Gold Fields Limited, said: "The inability of Eskom to supply the mines their full power requirements, and to commit to additional electricity demand for new mining projects currently in development, has caused a significant crisis in the SA mining industry.

"It is paradoxical that we have to consider downscaling in the current record-high gold price environment. To ensure sustainability of production and the security of the associated jobs, albeit at reduced levels, all available electrical power will have to be directed to higher margin, revenue generating shafts, at the expense of lower margin shafts and the Driefontein 9 shaft development project."

Gold Fields said the proposals were determined only after extensive and thorough review.

The group said in order to optimise the use of available electricity, and to ameliorate the impact on production, a number of electricity savings and optimisation projects are at various stages of implementation on all mines.

All non-essential electricity use has been stopped. Gold Fields' operations have implemented a number of demand-side management projects, diverting approximately 50 MW of electricity consumption to off-peak periods.

Projects to divert a further 100 MW is currently in progress or awaiting approval from Eskom. All operational plans and capital projects have been restated within the constraints of available electricity, and to divert available electricity to higher margin areas at the expense of lower margin areas and non-essential capital projects.

Gold Fields is currently controlling its average power usage to 540 MW, down from the historical average of 601 MW.

To provide some safeguard against future electricity cut-backs from the current 90% level, a number of opportunities for self-generation of electricity at the different mines are currently undergoing feasibility studies.

Gold Fields is to spend some R200m on additional emergency power to safeguard employees in the case of a total blackout.

"The health and safety of our employees remains our top priority. This programme is to be completed by calendar year end," it said.

- I-Net Bridge