Restructuring to save AngloGold’s SA business - report | Fin24
 
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Restructuring to save AngloGold’s SA business - report

Aug 23 2017 13:50
Lameez Omarjee


Company Data

ANGLOGOLD ASHANTI LIMITED [JSE:ANG]

Last traded 171
Change 0
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Cumulative volume 2027892
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg – For the remainder of the year AngloGold Ashanti [JSE:ANG] will undertake a restructuring strategy in its South African operations, which involves the finalization of a Section 189 process that will cost 8 500 miners their jobs.

The gold miner’s financial results for the six months ended June 30, 2017 revealed that it reported an operating loss of $65m (R856.46m) for the period, and a net loss of $165m (R2.174bn).

According to the report the restructuring process, announced on June 28, will ensure the future viability of the South African operation.

“Some of our older mines in the South African region have reached the end of their economic lives, several decades after they started production,” the report read. These mines have recorded unsustainable losses.

Among the challenges include near-depletion of ore reserves, increasing depth and distance from central infrastructure, declining production and cost escalations greater than inflation and the gold price.

The mines in question are TauTona in Carletonville and Kopanang mine in the Vaal region. For the first half of the year costs at TauTona came to $1.858/oz and $1.682/oz at Kopanang, compared to a gold price of $1.236/oz. Both mines also suffered operating losses in 2016.

These mines which including TauTona’s Savuka section and the West Gold Plant section of surface operations are fully impaired and will not generate future economic benefits, the report read.

The decision to retrench workers followed a review of available options to turnaround loss-making operations. AngloGold said that consultation with trade unions have begun. Of the 28 000 people employed by AngloGold, including contractors, 30% (8 500) will lose their jobs. A voluntary severance programme is open to employees.

Subject to the consultation process, AngloGold will place the Kopanang mine and the Savuka section of TauTona on “care and maintenance”

“Savuka mine has been in operation for 59 years, and has already been extended 10 years beyond its natural life. Kopanang mine produced its first gold in 1981, 36 years ago,” the report read.

AngloGold will also evaluate the option to integrate elements of the 60-year-old TauTona mine into the neighbouring Mponeng mine.

Joseph Mathunjwa, president of the Association of Mineworkers and Construction Union (AMCU), previously slammed mines and Mineral resources Minister Mosebenzi Zwane over the job losses in the gold mining sector. He said that current legislation allowed companies to enforce retrenchments to ensure profitability and that the very companies (AngloGold and Sibanye) whichw ere retrenching workers will investing in the US instead.

He called for structural changes to the economy. 

AngloGold shares were trading 3.13% down at R130.36 shortly after opening time on the JSE. Shares were trading at R130.80 at 16:00. 


anglogold  |  restructuring  |  gold  |  labour  |  earnings report
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