GOLD FIELD SET TO SHED HUNDREDS OF JOBS

Now loss-making Deep South mine set to trim workforce, only a week after Impala Platinum said it would cut 13,000 jobs

Gold Fields is preparing to lay off up to 1,560 people at its lossmaking South Deep mine, marking yet another attempt at restoring the operation which has absorbed R32bn so far.

“It is envisaged that approximately 1,100 permanent employees could potentially be impacted by the proposed restructuring. In addition, approximately 460 contractors could also potentially be impacted,” Gold Fields said.

We are unable to quantify the impact of the proposed large-scale restructuring

South Deep employs 3,614 full-time employees and 1,940 contractors.

The announcement follows a week after Impala Platinum, the world's second-largest platinum, said it would cut 13,000 jobs at its mines as it shuts five of its 11 shafts over the next two years to address six years of losses at its Rustenburg mines.

Lonmin, the world number three platinum miner, has said it will cut 12,600 jobs over three years as it stops old and unprofitable mines.

Gold Fields has repeatedly revised down its production targets at South Deep, which it bought in 2006, and on Tuesday it said the restructuring of the mine meant it was unlikely to reach the 480,000oz gold output forecast for 2022.

It 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.

“Given the significant impact of the restructuring from late 2017 and early 2018, we are unable to quantify the impact of the proposed large-scale restructuring on production in 2019 and beyond. Consequently, the previously guided buildup plan for the mine [released in February 2018] has a high degree of risk and uncertainty and can no longer be relied upon,” Gold Fields said.

Gold Fields has taken a R4.8bn impairment against South Deep, giving the asset a carrying value of R20.7bn.

South Deep’s production in the second quarter was flat at 49,000oz compared to 48,000oz in the first quarter despite 261 employees leaving the company during the first three months of 2018 after the departure of 47 management-level employees in the last quarter of 2017.

The mine spent R295m more than it earned in the second quarter, compared to a R361m cash burn in the first quarter.

There was further bad news for Gold Fields’ shareholders on Tuesday, with the company warning of a $0.52 per share drop in basic earnings to a $0.45 loss for the first half of 2018.

The loss came from the R4.8bn impairment of South Deep as well as a $96m (R1.3bn) charge in Ghana where it changed to contractor mining, incurring a $65m retrenchment cost and a $31m impairment of its mining fleet.