Gold Fields splurges R77m on BEE probe
GOLD Fields has spent $7.5-million (R77-million) on lawyers investigating the company’s controversial South Deep empowerment deal — enough to pay 700 entry-level underground workers for a year.
The board appointed international law firm Paul, Weiss, Rifkind, Wharton & Garrison in December to investigate the deal, which cost shareholders R1.1-billion in 2010.
The lawyers did not produce a report after their nearly eight- month investigation which could be released to shareholders, but instead made presentations to the board to discuss their findings.
Concerns included the list of beneficiaries, which include Jacob Zuma Foundation head Dudu Myeni, Cyril Ramaphosa’s business partner James Motlatsi and Nelson Mandela’s daughter Zindzi, and the role of bankrobber-turned-businessman Gayton McKenzie in facilitating the deal and a mining right for South Deep.
The presentations to the board led CEO Nick Holland to offer to forego his bonus for the current financial year.
Given the tough conditions in the gold-mining industry, it is unlikely his bonus would have been close to the R8.46-million he earned last year, out of a total package of R45-million.
In addition to the lower gold price, Gold Fields has restructured its business, spinning off all its South African assets with the exception of South Deep.
Last week, Gold Fields said South Deep was unprofitable and unlikely to meet its target of 700 000 ounces by 2016.
The company was also facing problems in Ghana, which contributed to the group reporting a 5% drop in production and a net loss of $129-million for the June quarter.
The troubles at South Deep seem set to continue, as members of the National Union of Mineworkers (NUM) will start downing tools on Tuesday night as part of an industry-wide strike over wages.
Employers who bargain through the Chamber of Mines, including Gold Fields, Harmony and AngloGold Ashanti, have offered an increase in basic wages of 6.5% for entry-level employees, and the opportunity to earn an additional 1% on basic wages as part of a “gain share” proposal, which is linked to per- formance. This would bring the average monthly pay for entrylevel underground workers to R9 170 per month, while average overtime and bonus payments would add R1 750, according to the Chamber of Mines.
Based on 2012 data, a strike would cost R349-million in lost revenue. Daily salaries and wages lost to employees would amount to about R100-million per day, the chamber said.
“Industrial action will not help the situation when there is no more to put into an offer. The gold industry is at stake,” said Harmony CEO Graham Briggs.