Sibanye’s thin executive line under scrutiny after deaths
Leaner management structure may have compromised safety
On the surface, with a leadership team of only 55 people overseeing more than six operations in South Africa, Sibanye-Stillwater’s management seems stretched to an alarming degree.
That could be one of the factors contributing to its steep rise in fatalities this year. Of the 45 mineworkers who have died in South Africa this year ,20 worked at Sib any eS till water operations. Since the company was founded six years ago, it has had 73 fatalities.
This week, Sibanye appointed a new safety manager to deal with the problem, which has fed into a weakening share price, down 39% this year.
The rise in fatalities comes as the miner is in a battle to rein in debt of R23-billion — more than its market capitalisation — caused by rapid expansion over its short history.
In that time, Sibanye has bought the labour-intensive operation of Gold Fields, the Kloof-Driefontein Complex, as well as Beatrix, a couple of Anglo American Plat-
It takes its toll on everyone James Wellsted
inum mines and a US miner, Stillwater.
Sibanye’s industry peer, AngloGold Ashanti, has 400 employees at its Johannesburg headquarters, including skilled technical staff, overseeing 14 operations in Africa and globally.
Anglo American, the most diversified of the country’s mining houses, has a corporate global headcount of 1 000 workers. It has 36 assets in South Africa and internationally.
Sibanye CEO Neal Froneman has focused much of his attention on removing hierarchies and making management more centralised, leaving the general managers and vice-presidents of the company’s individual mines to focus on operations.
If one adds middle management based at its mining operations, the miner has a South African leadership team of about 137 people.
Asked whether management was stretched, Sibanye spokesman James Wellsted said: “No, absolutely not.
“We took over in 2013 and removed hierarchies. We took the responsibility of unions and DMR [Department of Mineral Resources] and mayors away from them and they only focus on operations, and head office deals with those,” he said.
Some analysts have argued that the need to reduce debt came with a lot of cost-cutting, which probably meant that staff in its headquarters and its operations were hardpressed to meet production targets and management was stretched too thin.
Safety standards may have been compromised by management, say analysts. The fact that there is no new strategy on how fatalities can be avoided in future does not bode well for the miner as the market has more questions than answers.
Leon Esterhuizen, an analyst at Nedbank, said there were just too many questions about how Sibanye approached safety. “But these questions always point back to management. There is always something behind something, and that’s really the problem here. Unfortunately, there is going to be a massive focus on Sibanye and its management,” Esterhuizen said.
On its worrying fatality numbers, Wellsted said the company had to wait for the investigation to know what to do differently.
“We rolled out a fully revised strategy in 2017, which was successful.
“To say what we are going to do differently now, we don’t know. Our systems work quite well; where they don’t work we need to understand why.”
Analysts said that when assessing fatalities, one had to look at each case on its merits — such as the area where the miners were during the seismic event, and if it was in the mine’s “white areas”. White areas are parts of the mine that have not been mined out, where there is leftover gold.
Makwe Masilela, chief investment officer at Makwe Fund Managers, said the question was whether Sibanye had enough safety personnel.
“If you had four people in charge of safety before you went too deep, and now because you are much deeper, should you not maybe consider having 50% more safety people or doubling it up?” Masilela said.
The previous owner of Sibanye’s gold mines, Gold Fields, had experienced 176 deaths between 2006 and 2012 in the KDC mines, including South Deep.
This poses a question about the risk of the operations. They have been historically problematic to mine because of their depths, reaching some 4km, and their labour-intensive nature.
Masilela said he was waiting for the day when a South African mining company would shut down for safety reasons instead of having the government do it.
“If they [mining companies] would say something like, ‘We know that there is ore there and we can make money, but our worry is safety, so we need to stop mining’, that would be a good change of mentality towards safety,” Masilela said.
Wellsted said Froneman and the rest of management were taking the rise in fatalities hard. “It takes its toll on everyone.”
By the end of the year, Sibanye is expected to acquire troubled platinum miner Lonmin, which will add a further 20 000 employees at Marikana to its roster, bringing the total number of its workers to 85 000.
Sibanye-Stillwater appointed a new safety manager this week.