NUM to strike over South Deep

The National Union of Mineworkers (NUM) plans to strike at the struggling South Deep mine, which is owned by Gold Fields, over plans to lay off 1,520 workers.

The National Union of Mineworkers (NUM) plans to strike at the struggling South Deep mine, which is owned by Gold Fields, over plans to lay off 1,520 people working at the unprofitable operation.

South Deep has sucked in R32bn to buy and develop but has yet to make money for shareholders, let alone pay back the capital.

PRODUCTION TARGETS

This is despite numerous plans and strategies since Gold Fields took ownership in 2006.

In August, Bank of America analyst Jason Fairclough described the continued downward revision of production targets and, more recently, the removal of production forecasts, as a “debacle”.

In August, Gold Fields told the market it would lay off 1,100 staff and 460 contractors, adding to the jobs bloodbath in the SA mining industry. At the time the mine was running up losses of R100m a month. Gold Fields said the restructuring meant the mine was unlikely to reach the 480,000oz gold output it had forecast for 2022 in a R3bn programme to bring it to completely mechanised production by then.

South Deep is the last mine Gold Fields has in SA and it has run up losses of R4bn over the past five years as management tried and failed to successfully convert the mine to a large, deep-level, mechanised mine from the labour-intensive conventional mine it used to be.

An initial plan pegged output at 800,000oz a year by 2014, with a revision to 680,000oz a few years later.

In 2017, the target was reduced to 500,000oz and in early 2018 was dropped to 480,000oz a year. That number was subsequently taken off the table, with the firm expected to provide market guidance in February 2019.