An­gloGold job cuts may be tip of ice­berg

CityPress - - Business - DE­WALD VAN RENS­BURG de­wald.vrens­burg@city­press.co.za

An­gloGold Ashanti’s clo­sure of two mines and po­ten­tial re­trench­ment of 8 500 work­ers could be only the be­gin­ning of a new pe­riod of con­trac­tion in the 130-year-old in­dus­try.

Many shafts at other com­pa­nies are los­ing money due to the cur­rent gold price, which has fallen pre­cip­i­tously since last year in rand terms.

Jobs in the in­dus­try have hov­ered at about the 120 000 mark since 2014, but in the decades be­fore that, mine clo­sures en­sured an al­most un­in­ter­rupted de­cline in pro­duc­tion and em­ploy­ment, which was nearly 400 000 in 1994.

An­gloGold CEO Srini­vasan Venkatakr­ish­nan said: “Ba­si­cally, the vol­umes are down and the low ore grade com­pounds that. We’re min­ing fur­ther away from the in­fra­struc­ture ... min­ing rem­nants. The rand price plays a part, but even at a higher price, we would be get­ting closer to clo­sure.”

A meet­ing with Min­eral Re­sources Min­is­ter Mosebenzi Zwane on Fri­day was “cor­dial”, said Venkatakr­ish­nan.

“We gave the min­is­ter a heads-up be­fore the an­nounce­ment, as you do, and he ap­pre­ci­ated that.

“We agreed to meet so he could be fully briefed. It was a very pos­i­tive meet­ing.”

Zwane is­sued a state­ment on Fri­day say­ing he had in­structed the Min­eral and Petroleum Board to “ver­ify the in­for­ma­tion pro­vided by the com­pany”.

“We con­tinue to ap­peal to com­pa­nies to act re­spon­si­bly and with sen­si­tiv­ity. These are not just num­bers to be thrown around, but peo­ple’s liveli­hoods and fu­ture job prospects, and we should not take this mat­ter lightly,” Zwane said.

“It is in­cor­rect to say sec­tion 54s con­trib­uted to this,” he said, re­fer­ring to the depart­ment of min­eral re­sources’ safety stop­pages, which are of­ten crit­i­cised by the in­dus­try for be­ing heavy-handed.

Venkatakr­ish­nan said: “It has noth­ing to do with the Min­ing Char­ter. It the char­ter had not been pro­mul­gated, we would have made the same an­nounce­ment. It is fun­da­men­tally about the eco­nomics.”

The plan is to put the com­pany’s Kopanang mine near Orkney and a large part of its Tautona mine in Car­letonville on care and main­te­nance.

That is not the same as fi­nal clo­sure and re­ha­bil­i­ta­tion as the mine in­fra­struc­ture is kept in­tact and the pump­ing of wa­ter from the shafts con­tin­ues.

“The gold in­dus­try has chal­lenges, but you also can’t put all mines in the same bas­ket,” said Venkatakr­ish­nan.

Kopanang, which opened in 1981, is 2.3km deep and has the low­est grade of ore among An­gloGold’s South African mines. The mine’s re­ha­bil­i­ta­tion li­a­bil­i­ties – the money set aside for de­com­mis­sion­ing it – is in the re­gion of $13 mil­lion (R170 mil­lion).

Tautona in Car­letonville is 70 years old and its re­ha­bil­i­ta­tion fund was $15.5 bil­lion last year.

These clo­sure funds can only legally be used if you go through a for­mal mine clo­sure process, which would in­volve get­ting a clo­sure cer­tifi­cate from the depart­ment of min­eral re­sources.

De­spite the age of the in­dus­try, proper mine clo­sures are rel­a­tively rare.

In An­gloGold’s case, many of its mines near­ing the end of their lives were sold off in the 1990s.

“In the past, we have sold on older mines to, say, African Rain­bow Min­er­als,” said Venkatakr­ish­nan, re­fer­ring to the sale of aged mines to bil­lion­aire busi­ness­man Pa­trice Mot­sepe’s min­ing com­pany in the late 1990s.

“We would be com­fort­able sell­ing if there is a cred­i­ble buyer that can close the mine and not leave it derelict. We are cog­nisant of what has hap­pened at some other mines,” he said.

Venkatakr­ish­nan was un­doubt­edly think­ing of Blyvooruitzicht, an 80-year-old mine in Gaut­eng that went into pro­vi­sional liq­ui­da­tion in 2013 and was, for all intents and pur­poses, aban­doned.

Be­fore that, there was the saga of Pamodzi Gold, a com­pany built on old mines that had traded hands sev­eral times.

It also went into pro­vi­sional liq­ui­da­tion and was pil­laged for gold and scrap metal by a com­pany tied to Pres­i­dent Ja­cob Zuma’s nephew Khu­lubuse.

In both in­stances, work­ers were owed sev­eral months worth of salaries and es­sen­tially started squat­ting on the prop­erty, which zama-za­mas soon over­ran. The odds of the two An­gloGold mines be­ing re­vived are slim. Ste­wart Bai­ley, an An­gloGold spokesper­son, said Kopanang re­quired a gold price of about R800 000 and Tautona needed it to be about R700 000 for the mines to make money. The gold price is now roughly R500 000. “You can sus­tain losses for quite some time if you have a cred­i­ble plan to turn it around,” he said.

An­gloGold can­not af­ford to have ei­ther mine fall into dis­re­pair. At both, it has vi­able re­sources and ad­ja­cent mines that would be da­m­aged if Kopanang or Tautona were to flood be­cause wa­ter pump­ing stopped.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.