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Johannesburg - The chief executive of Sibanye Gold [JSE:SGL] said on Thursday that the government could not legally stop job losses or hold the industry "to ransom" if companies were losing money.
"I'm sorry for being so blunt but we are tired of political comments," Neal Froneman said at a presentation of the company's interim results.
The SA mining ministry is holding talks with companies and unions over planned job cuts as the government frets over high unemployment ahead of the local elections next year.
Profit falls
Sibanye maintained full-year cost and production forecasts even as the first-half earnings dropped 77% after prices for the precious metal fell.
Headline earnings, which exclude one-time items, declined to $14.3m in the six months to June 30, compared with $61.2m in the same period in 2014, the company said in a statement on Thursday. It will pay an interim dividend of 10 cents.
Sibanye has tumbled 32% this year as gold fell to a five-year low and output declined in the first quarter after a series of processing-plant stoppages.
While the company said it recovered from these incidents in the second quarter, gold has fallen 8.2% to below $1 100 an ounce since March 31 on expectations that the Federal Reserve will raise interest rates, reducing demand for the haven asset.
“The general decline in commodity prices to multiyear lows continues to place considerable financial stress on mining companies globally,” the company said in the statement. “While Sibanye is not immune to these macroeconomic factors and faces numerous other challenges, it is able to weather lower gold prices.”
The stock rose as much as 2.1% and was trading 1.6% higher at R15.67 by 09:18 on the JSE, the only gainer in the five-member FTSE/JSE Africa Gold Mining Index.
Gold output of 713 900 ounces was little changed from 711 900 ounces a year earlier.
Electricity constraints
Sibanye lost 8 660 ounces, or the equivalent of R125m in revenue, due to power cuts in the first half, it said in the statement. It had to curtail electricity usage by as much as 20% for 344 hours in the three months ended June 30, compared with 173 hours during the previous quarter, it said.
Eskom is struggling to meet demand for electricity amid delays in the building of new plants and frequent breakdowns of older ones.
“The deterioration in the security of electricity supply, coupled with strong indications that the Eskom tariff trajectory is likely to exceed earlier projections, has further strengthened the business case for developing an independent photovoltaic electricity supply,” the company said.
“Our target date for first generation from a first phase of the envisaged 150-megawatt installation remains towards the end of 2017.”
Sibanye’s full-year production will probably be at the lower end of the range of 50 000kg to 52 000kg, it said.
