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Turnaround strategy delivers results for South Deep -

Monday, 25 January 2021

Dual-listed gold miner Gold Fields is confident that it is on track to meet its life-of-mine steady-state production target at its South Deep gold mine in Westonaria.

While the South African asset was affected by the COVID-19 pandemic, it has maintained traction with its production ramp-up and expects to meet its 2020 production guidance of 225 000 oz, executive vice president for South Africa MARTIN PREECE tells CHANTELLE KOTZE.

South Deep – an asset that has underperformed for years – is showing substantive progress both operationally and financially, having increased its gold production by 63% to 64 900 oz in the September 2020 quarter from 39 800 oz in the COVID-19 affected June quarter.

Announcing the company's half year results for 2020, CEO Nick Holland, said South Deep is now generating meaningful cash flow at current gold prices.

Since undertaking a massive restructuring process at South Deep in 2018, in which Gold Fields recalibrated the mine's cost base and reduced its workforce and mobile equipment fleet, the mine began to demonstrate remarkable improvements in productivity and production and generated positive cash flow during 2019.

Notwithstanding the impact of the COVID-19 pandemic on the operation, Preece says South Deep is largely on track with where the operation should be from an efficiency, productivity and financial point of view.

Although the mine experienced a disrupted second quarter due to lockdown restrictions, the operation bounced back in the third quarter, and the company is pleased with the progress it has made since the restructure to set the operation up for long-term and sustainable growth.

Moving forward, emphasis is on ensuring substantive progress in the short to medium term on the mine's four core strategic focus areas, namely organisational capacity, internal business processes, stakeholders and financial performance.

Sustaining traction in these areas remains integral to facilitating delivery on the production ramp-up and is pivotal to maintaining the mine's profitability and reaching a sustainable steady-state production profile over the mine's remaining 75-year life, says Preece.

Creating margin in the business

One of the key objectives of the restructuring process at South Deep was to move the focus from producing ounces to producing profitable ounces, says Gold Fields vice president for people and organisational effectiveness Gerrit Lotz.

In order to do so, Lotz explains that Gold Fields adopted a four-phased turnaround approach at South Deep. The first phase was to understand what was working and what was not working from a social, commercial and technical perspective, which translated into a clear turnaround strategy.

The second phase was to recalibrate the mine by focusing on its priorities; and rightsizing the operational footprint, equipment, cost structures and labour accordingly.

The third and current phase, is focused on stabilising and optimising the mining and operational value chain, ensuring that people, process, systems and technology all work in tandem.

This lays the foundation to move into the fourth phase, dubbed the ‘mine of the future', in which Gold Fields will optimise the operation against benchmarks with the aim of becoming a best-in-class mine.

Following the labour restructuring and rationalisation of the mobile underground production fleet, South Deep now has a workforce of 4 000 people, comprising employees and contractors.

Despite the reduction in the workforce and equipment, productivity – which is measured in ounces per fully costed employee – has increased dramatically, while the cost per ton of gold produced is also decreasing.

The reduction in the underground production fleet has decluttered the underground workings, which has placed the asset in a much better position for Gold Fields to better operate, maintain and manage, believes Preece.

This has dramatically extended the time between failures on all equipment including the load and haul, and drilling fleets from between two and five hours to between 10 and 15 hours.  

Creating an enabling environment

The programme is structured around five phases of intervention, namely shaping the culture, building capability, managing the work, improving the work and sustaining the improvement.

According to Preece, if South Deep is to meet any of its operational targets, it needs to create and enabling environment and improve the engagement, capacity and capability of its people, which it is doing through its frontline productivity improvement programme called Siyaphambili.

"At South Deep, our people's capability and capacity is developed and is measured against four main anchors," notes Preece.  Depending on how they perform against these anchors, the coaching and upskilling of employees is undertaken, with the aim of driving personal operational improvement year on year, he explains.

"In so doing, and without first seeing the business results, we can accurately predict what individual's performance results are going to be based on the degree of compliance to these anchors," he adds.

Having made tremendous strides in recent years to turn the underperforming South Deep asset around, Holland and Preece are confident in South Deep's future contribution to the larger Gold Fields portfolio.

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