Sibanye may lose R756m to Zamas

Sibanye Gold “guesstimates” it’s losing 3% to 4% of its gold production to illegal miners, says the company’s vice-president for protection services Nash Lutchman.

This emerged at a briefing the company held this week aimed at “contextualising illegal mining”.

Moneyweb calculates that, in the 12 months to March 2017, Sibanye produced 41 203kg of gold from underground operations. Three-and-a-half percent of this would translate to lost revenue of R756 million based on spot prices and exchange rates.

Sibanye recently experienced an unprotected strike at its Cooke operations following worker dissatisfaction, with stringent security measures imposed to curb the supply chains feeding illegal miners underground.

This action served to “smoke” the illegal miners out, as fewer Sibanye employees going down as a result of the strike meant less food and supplies. Sibanye has since arrested 461 illegal miners and nine security employees at Cooke since operations began this month.

“It’s a significant threat to the South African mining industry, probably costing in the region of R20 billion a year. At any one time, we think there’s around 800 illegal miners underground at our gold operations,” says Lutchman.

Zamas have resorted to increasingly desperate measures to get into shafts and smuggle contraband and gold in and out of mines. The zamas are capable of getting gold-bearing ore to the form of amalgam gold balls. With one gram of amalgam going for between R450 and R600, an amalgam ball of 20 grams could very easily be worth R12 000.

The illegal miners are, in many cases, supported and protected by the mining communities. “In many cases they might be ex-miners who have lost their jobs, returned and become illegal miners,” Lutchman says.

It’s a significant threat to the South African mining industry.

Nash Lutchman Vice-president protection services, Sibanye Gold