Strike halts Kusasalethu mine

• Har­mony Gold se­cures in­ter­dict against in­dus­trial ac­tion in protest against dis­missal of Amcu branch lead­er­ship

Business Day - - FRONT PAGE - Al­lan Sec­combe Re­sources Writer sec­combea@bdfm.co.za

Har­mony Gold’s most trou­bled mine, Kusasalethu, is at a stand­still af­ter work­ers em­barked on an un­pro­tected strike at its sec­ond-largest gold source and vi­o­lence erupted in nearby com­mu­ni­ties.

Har­mony Gold’s most trou­bled mine, Kusasalethu, is at a stand­still as work­ers em­bark on an un­pro­tected strike at its sec­ond­largest gold source and vi­o­lence erupted in nearby com­mu­ni­ties.

Work­ers started an un­pro­tected stop­page on Fri­day to protest against the com­pany’s dis­missal of the branch lead­er­ship of the As­so­ci­a­tion of Minework­ers and Con­struc­tion Union (Amcu), for its role in un­pro­tected in­dus­trial ac­tion at the mine ear­lier in 2017.

“The dis­missal of the branch lead­er­ship fol­lows an ex­ten­sive le­gal dis­ci­plinary process fol­lowed by [the] man­age­ment,” Har­mony CEO Peter Steenkamp said in a state­ment.

“We ap­peal to em­ploy­ees to re­turn to work and strongly con­demn any act of vi­o­lence or in­tim­i­da­tion. It is im­por­tant that dis­ci­pline at the mine be re­stored to en­sure the sus­tain­abil­ity of the mine,” he said.

The mine has come un­der in­tense man­age­ment fo­cus to re­turn it to prof­itabil­ity and, while still a large con­trib­u­tor of gold, it has now been grouped in the short-life group of as­sets to re­store it to fi­nan­cial health, ef­forts that are un­der­mined by the un­set­tled labour sit­u­a­tion.

Har­mony said that the strike con­tin­ued dur­ing the week­end.

It prompted the com­pany to seek and se­cure an ur­gent in­ter­dict against the strike from the Labour Court on Mon­day.

The no­tice would be served on em­ploy­ees, com­pelling them to re­turn to work on the night shift, it said.

Amcu de­clined to com­ment, say­ing that it was in talks with the com­pany.

The Na­tional Union of Minework­ers, Amcu’s ri­val in the plat­inum and gold sec­tors, al­leged that four of its mem­bers’ houses and cars were set alight at the week­end as ten­sions at the mine spilt over into com­mu­ni­ties around Car­letonville.

Kusasalethu, which has been plagued by labour stop­pages and vi­o­lence, was scaled back to mine just high-grade, newer ar­eas of the mine, a de­ci­sion that slashed the life of the mine to five years from more than 20 years, with un­prof­itable un­der­ground work­ings moth­balled. Har­mony cut the loss-mak­ing mine’s 6,000 work­force by 1,300 peo­ple. The mine had a six-day un­pro­tected stop­page in April af­ter an un­der­ground sit-in in Jan­uary that dis­rupted pro­duc­tion.

In the fi­nan­cial year to endJune 2017, the mine pro­duced 141,270oz of gold com­pared to 124,198oz the year be­fore.

The mine has also ex­pe­ri­enced safety prob­lems, with five work­ers killed in an un­der­ground earth tremor in Au­gust.

In 2014, Har­mony shut the mine for two weeks to re­move more than 100 il­le­gal min­ers from un­der­ground af­ter a spate of fires. The shut­down cost it an es­ti­mated R112m in lost rev­enue. In Novem­ber 2012, two peo­ple were shot and killed and an­other wounded at the mine as the two unions clashed.

WE AP­PEAL TO EM­PLOY­EES TO RE­TURN TO WORK AND STRONGLY CON­DEMN ANY ACT OF VI­O­LENCE

There was an up­beat tone to Her­man Kotze’s pre­sen­ta­tion of Net1’s quar­terly re­sults on Fri­day. Not that the re­sults for the three months to end-Septem­ber were par­tic­u­larly en­cour­ag­ing, but the rel­a­tively new CEO was ex­cited about the group’s prospects.

Kotze was de­ter­mined to per­suade any­one lis­ten­ing in to the earn­ings call that Net1 is much more than Cash Pay­mas­ter Ser­vices’s (CPS’s) con­tract with the South African So­cial Se­cu­rity Agency (Sassa). It might help if he had been able to re­port progress ap­point­ing a chief fi­nan­cial of­fi­cer, but six months af­ter Net1 founder Serge Be­la­mant left and Kotze slipped into his role, the chief fi­nan­cial of­fi­cer po­si­tion is va­cant.

Not ev­ery­body, check Black Sash for one, will have been as ex­cited as Kotze about Net1’s con­tin­ued growth in its EasyPay Ev­ery­where (EPE) of­fer­ing and re­lated ser­vices in­clud­ing ATMs and fi­nan­cial ser­vices such as SmartLife. The tie-up with Cell C is ex­pected to drive fur­ther growth for EPE.

Although Be­la­mant has ex­pressed reser­va­tions about the multi­bil­lion-rand tie-up with Cell C (be­cause of Net1’s lack of con­trol) Kotze seems cer­tain the two com­pa­nies have made good progress to­wards “the re­al­i­sa­tion of an­tic­i­pated syn­er­gies”.

But the big­gest source of ex­cite­ment for Kotze was Net1’s new in­ter­na­tional ini­tia­tive, which re­volves on plans to de­velop a global busi­ness based on the tech­nol­ogy used by CPS in its Sassa con­tract.

“This busi­ness will fo­cus ex­clu­sively on large-scale fi­nan­cial in­clu­sion in emerg­ing mar­kets and economies glob­ally.”

Its tar­get mar­ket is the 2.5-bil­lion peo­ple across the globe with­out a bank ac­count.

No doubt this time, the In­ter­na­tional Fi­nance Cor­po­ra­tion will be watch­ing closely to en­sure there isn’t a rep­e­ti­tion of the South African scan­dal.

Kusasalethu was one of Har­mony’s long-life, im­por­tant mines, but years of un­der­per­for­mance and prob­lems with labour, safety and losses prompted a re­think that led to man­age­ment opt­ing for a fo­cus on the high-grade parts of the op­er­a­tion and short­en­ing its life dra­mat­i­cally.

Kusasalethu, near Car­letonville, was planned to be a 20year mine, with a fresh mine de­vel­oped un­der the old work­ings and gold ex­tracted from both ar­eas. But that plan has come to naught, partly be­cause of un­set­tled labour con­di­tions at the mine, with the life re­duced to five years as min­ing fo­cuses on the new ar­eas.

The labour strife ap­pears to be tied to the rise of the As­so­ci­a­tion of Minework­ers and Con­struc­tion Union (Amcu) at the mine from 2012, dis­plac­ing the Na­tional Union of Minework­ers.

With about two-thirds of the work­force rep­re­sented by Amcu, there have been mut­ter­ings that per­haps the lead­er­ship of the union at mine level wasn’t as strong or as dis­ci­plined as it could be, lead­ing to a num­ber of un­pro­tected strikes and sit-ins, dis­rupt­ing pro­duc­tion at a time when the mine can least af­ford it. Con­stant stop­pages cur­tail any po­ten­tial fu­ture ex­ten­sion of life at the mine.

There is still gold in the old work­ings, which if costs were low­ered and the gold price was higher, could be ex­tracted.

Har­mony could also make an in­vest­ment de­ci­sion to go deeper yet, but with the con­di­tions at the mine, these op­tions are drift­ing away, some­thing the gold in­dus­try can ill af­ford when old mines are com­ing to the end of their lives and are be­ing shut down across the board.

Graphic: RUBY-GAY MAR­TIN Source: BLOOMBERG STAND­STILL AT MINE

Graphic: DOROTHY KGOSI Source: IRESS

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