The viability of the lossmaking South Deep gold mine is facing a double whammy.
The mine is located in Westonia, western Johannesburg.
The first blow is evident in an internal newsletter distributed to South Deep staff, of which City Press has a copy.
This document shows that production at the operation has worsened considerably since the mine’s owner, Gold Fields, announced in mid-August that it would restructure the mine and cut jobs.
Thulani Mashibini, secretary for the National Union of Mineworkers’ (NUM’s) South Deep branch, said the union was aware that gold output was not where it should be.
He put the worsening situation down to general anxiety at the mine about who would keep their jobs.
A second blow to the mine comes in the form of a threat by the NUM, the dominant union at the operation, to strike at South Deep.
Mashibini said that once the 60-day statutory consultation period ended on October 14, the NUM could strike at South Deep because the mine was not considering job avoidance measures.
Such a strike would increase losses at the operation.
Gold Fields spokesperson Sven Lunsche said: “There has been an impasse between the parties regarding alternatives to retrenchments, which have briefly interrupted the consultation process.
“The parties have, however, resumed engagements.”
On August 14, Gold Fields said it would shed 1 560 more jobs, comprising 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.
The South Deep newsletter shows that in July, the mine produced 617kg of gold, missing its production target of 799kg by 23%. And in August, the gap between planned output and actual production widened to 35%.
In September, performance was even worse.
For the first three weeks of that month, the mine produced 264kg, missing its output target of 509kg by 48%.
Regarding South Deep’s production performance, Lunsche said: “We are not in a position to give you an updated production performance since we are in a closed period.”
In a letter addressed to South Deep staff last month, Martin Preece, the head of Gold Fields’ local operations, and Benford Mokoatle, South Deep’s manager, said that at a meeting on September 26 with the NUM “the outcomes were not positive”.
“The NUM informed the Commission for Conciliation, Mediation and Arbitration (CCMA) and the South Deep team that they opposed any retrenchments.
“The NUM informed the CCMA that unless Gold Fields was prepared to change its mind about the proposed restructuring and terminate contractors, they would no longer engage in consultations with us.”
The NUM submitted South Deep management with 12 demands, including the following:
. That 76 South Deep employees be trained as security personnel to replace G4S security;
. That Gold Fields “release” (meaning, fire) Preece and Mokoatle “as they have dismally failed South Deep”;
. That they stop employing contractors and get work done by South Deep employees;
. That they appoint a well-qualified safety, health and environment team; and
. That they not halt new mine development to stem losses.
In response, Preece and Mokoatle said the company could not afford to consider in-house security as it would cost too much, adding that private security companies had “special skills”.
Trade union Uasa’s gold mining representative, Nico van Rooyen, said that in its submission to South Deep management Uasa focused on transferring the jobs done by contractors to existing South Deep permanent staff as a means of minimising job losses.
“Attempts to push the employer to absorb affected permanent employees into contractors’ vacancies were not positive,” said Van Rooyen, referring to a meeting with South Deep management held this week.
“I think the discussions about contractors are exhausted. Management would like to keep most contractors as they are specialists,” he added.
On the issue of contractors, Preece and Mokoatle said: “The mine will have difficulty in terminating contracts where the work to be performed by contractors is specialised in nature – requires specialised skills, equipment or expertise; where the work is ad hoc in nature – is turnkey or of limited duration; and where the termination has the potential to cause substantial financial, operational or safety risk.”
Regarding the demand that Preece and Mokoatle be fired, the response from South Deep was as follows: “Gold Fields management and the board of directors fully support both Martin Preece and Benford Mokoatle, who have many years of experience necessary to oversee such a challenging operation.”
A source close to South Deep indicated that the mine had seen a high turnover of mine managers over the past five years and this had been very disruptive to the operation.
Mashibini said the NUM “was not happy at all” about South Deep’s response to the union’s demands.
South Deep management had a preconceived idea of what they wanted to achieve and were trying to push it through, Mashibini said.
For the 2016 financial year, South Deep incurred losses of more than R109 million a month, according to the notice issued in August.
Gold Fields had invested R32 billion, including the acquisition price of R22 billion, since acquiring it.
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