• Privatisation tweet

    A probe into a tweet by Tesla chairperson and CEO Elon Musk may open pandora's box.

  • State Capture Inquiry

    Nedbank says ex-Mining Minister Mosebenzi Zwane sought to keep Gupta accounts open.

  • Tighter rules

    'Corporate scandals, rumours and innuendo' has prompted the JSE to plan new listing rules.

Loading...

Sword of Damocles hangs over miners' heads

Aug 19 2018 06:03
Justin Brown and Lesetja Malope

Only a fifth of those who could lose their jobs at South Deep mine, western Johannesburg, would be able to find other jobs.

So said trade union Uasa’s gold mining representative, Nico van Rooyen.

This week Gold Fields said it could shed 1 560 more jobs, made up of 1 100 permanent employees and 460 contractors, out of a total workforce of more than 5 500 at South Deep to try to stem the mine’s losses.

Uasa represents about 500 people at the South African mine, including miners, artisans and officials, Van Rooyen said.

South Deep is owned by Gold Fields and is the only fully mechanised local gold mine.

The mine issued a restructuring notice this week – of which City Press has a copy – in terms of the Labour Relations Act.

South Deep tried to cut costs or achieve improvement in 10 different areas, saving an estimated R324 million a year before moving to cut more jobs, according to the notice.

These measures included retrenching 307 managers and employees and not awarding increases to top-level employees, which reduced annual costs by R135 million.

The notice listed 11 measures that South Deep had tried to turn around the performance.

The biggest area in which South Deep is looking to cut jobs is in the engineering section where a net of 665 jobs could be lost, followed by the mining unit where a net of 152 jobs could be cut.

For the 2016 financial year, South Deep incurred losses of more than R109 million a month, according to the notice.

“These losses persist in spite of the fact that we have put in place the rebase plan and entered into various agreements with organised labour aimed at getting the mine on track,” said Martin Preece, head of Gold Fields’ local operations, and Benford Mokoatle, South Deep mine manager, in a joint note this week.

In February last year Gold Fields relaunched its “rebase” plan for South Deep to try to achieve an annual gold output of 500 000 ounces a year, down from a target of between 650 000 and 700 000 ounces a year that was put on hold in 2015 and 800 000 ounces a year before the mine was bought in 2006.

That “rebase” plan was put on hold this week.

“With all this effort and investment, South Deep should be operating as a highly efficient, mechanised mine and production, costs and productivity should be better than any other gold mine in South Africa. However, we continue to operate at a loss,” Preece and Mokoatle said.

“The current situation cannot continue. Just as no person can continue to spend more than they earn every month, so the mine cannot continue to spend more than it makes,” they said.

“The Gold Fields board has therefore made an in-principle decision to reduce South Deep’s costs base to match its current production,” Preece and Mokoatle said.

Gold Fields had invested R32 billion, including the acquisition price of R22 billion, since acquiring it.

On the topic of reducing the contractor workforce at South Deep, Sven Lunsche, spokesperson for Gold Fields, said: “We are having consultations and negotiations with the affected contractor companies in the next week to decide how many positions and which companies would be affected.

“Clearly, the main areas are in mining and engineering in which a number of firms – such as Atlas Copco, African Explosives, Red Mining and Sandvik – provide support, maintenance and construction services,” Lunsche said. “In most cases we don’t envisage cancelling entire contracts, but we would envisage reducing the scope of the contracts,” he said.

Van Rooyen said that clearly Uasa’s members at South Deep were not happy about the move to restructure but realised there “was no way out” and “we will try to minimise the jobs lost”.

South Deep wants to finalise its consultations process by October 14, according to the restructuring notice.

The proposed severance pay for those who might be retrenched is two weeks’ basic wages for each year of service with a minimum severance package of not less than R20 000, as well as notice pay and outstanding leave, the note said.

In another development Impala Platinum might consider selling five uneconomical shafts it was looking to shut if the decision would save jobs, company spokesperson Johan Theron said this week.

“We have agreed to explore alternative commercial options before a final decision is made to operate, sell or close the shafts,” Theron said.

Earlier this month the company said it would undergo a two-year review process that could cost 13 000 jobs.

Mineral Resources Minister Gwede Mantashe did not take too kindly to the looming job cuts and said the company had acted in bad faith, was careless and “mindlessly committed to implement its predetermined outcome, no matter how unworkable that might be”.

Department spokesperson Ayanda Shezi said Implats was set to meet the mining ministerial board about the issue, something it was supposed to do before announcing the decision.

Earlier this month, the company announced that it would be undergoing a two-year strategic review process that will cost more than 13 000 workers their jobs and the workforce reduced to 27 000. The company said the shafts had become uneconomical to operate.

“The Department of Mineral Resources was still at the beginning of an engagement with Implats, wherein we encouraged them to consider different options of saving jobs and keeping their operations working,” the statement read.

In response, Theron said the company believed it has presented a well-considered plan following years of consultation.

Theron added that the company was being sensitive to the potential socio-economic impacts that might flow from the restructuring plan when it decided to not issued a Section 189 restructuring notice for the shafts at risk of closure.

But rather agreed with the DMR to initiate a multi-stakeholder engagement process explore alternative measures before a final decision is made to close shafts.

Impala Platinum (Implats) may considering selling off the five shafts it is looking to shut if the decision would save jobs, company spokesperson Johan Theron said this week.

“We have also agreed to explore alternative commercial options before a final decision is made to operate, sell or close the shafts,” Theron said.

* SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What do you think of President Cyril Ramaphosa's economic stimulus plan?

Previous results · Suggest a vote

Loading...