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Gold Fields CEO Nick Holland says the company has no plans to let go of its loss-making South Deep mine, with the firm having announced it would lay off 1 560 workers in a bid to turn around operations.
South Deep, which Gold Fields [JSE:GFI] acquired in 2006, has been losing approximately R100m per month, with several failed turnaround strategies under Holland’s watch.
The mine, which is the world’s second-biggest known body of gold-bearing ore, has lost R4bn over five years, with the company spending about R32bn on the asset since its acquisition.
The mine's misfortunes are likely to cast a shadow on Holland's term at the helm of the company he took charge of in May 2008.
Bleeding resources
Holland said the bleeding of resources had necessitated the controversial restructuring plan, admitting that there was no silver bullet to the mine’s woes.
"But if we do not do something, we fear that the operation will continue to struggle," Holland told Fin24.
"We can’t continue losing R3m a day, which is what we are currently incurring."
He said interventions such as shift management and overseas consultants had previously been brought in as attempted solutions.
The company's interim results released on Thursday showed that South Deep had registered a R4.8bn writedown in the six months ended June 30.
It is the cost that Holland aims to plug by streamlining the operations of its only remaining mine, saving 4 000 more remaining jobs.
Holding on to his job
He insisted that the company had not gone ahead with the restructuring plan, and was still going to consult with the unions, a process that can last for a period of 60 days or even longer.
"We have an obligation to our shareholders to do something different, so clearly we have to consider alternatives, but [that] does not mean this is the only alternative," he said.
"We believe that South Deep can be a good mine in the future; it’s got good, large ore reserves," he said.
In an interview with News24, Mineral Resources Minister Gwede Mantashe slammed Holland’s "backward" leadership, calling for him to resign and saying he had failed to tackle challenges faced by the mine successfully.
Holland stated that he was determined to hold on to the job, as he had the support of the board.
"In this job you have to learn to absorb the criticism. I am quite committed; me and the board (sic) are committed to walking the road of getting South Deep right.
"This is obviously a tough nut to crack," he added. "I can understand the minister’s concern, because obviously job losses in the industry are not good for anybody."
Gold Fields has operations in Australia, Ghana and Peru, which registered a net cash flow of $190m. The company also said it expected to produce 2.08m to 2.1m ounces of gold for 2018.
"The performance of international operations, which makes up 90% of our total production, [was] above expectations in terms of production and cost. We are very happy with the project pipeline that is emerging in Chile and Australia and Ghana," Holland said.
"Overall, the company is in reasonable shape."
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