Media releases

Gold Fields and NUM Reach Agreement on South Deep Operating Model

Tuesday, 2 October 2012

Johannesburg, Tuesday, 2 October 2012. Gold Fields Limited (Gold Fields) (JSE, NYSE, NASDAQ Dubai: GFI) is pleased to announce that it has reached a formal agreement with the National Union of Mineworkers ("NUM") to implement a new operating model at its developing South Deep Gold Mine ("South Deep") near Johannesburg in South Africa.

Gold Fields CEO Nick Holland praised the national, regional and branch leadership of the NUM, which played a critical role in securing this ground-breaking agreement in a challenging environment: "This agreement will define the future of South Deep and position it to become one of the most modern underground mechanised mines both locally and internationally. The agreement shows that there is indeed room for constructive collaboration in South African labour relations."

The new South Deep operating model will not only secure current jobs but allow the mine to create an additional 400 full-time positions at the mine. It should improve productivity and performance in order for the mine to approach international best practice.

The new operating model was previously agreed to by UASA. Now that the parties have agreed on the key aspects of the new operating model, South Deep has withdrawn the Section 189 notice issued to the NUM on 2 August 2012.

The key elements of the agreement are as follows:

New Full Calendar Operations agreement ("FULCO")

The benefits of this agreement are that South Deep will have five more working hours per day, which is a 25% improvement. In addition South Deep will have seven more production days per year. Employees will on average work 50 days less per year.

Total Rewards Scheme 

Through the new total rewards scheme, compensation will be aligned with local best practice benchmarks, while the new bonus scheme will enable employees who exceed production targets, to earn significantly more than they do today.

Grading system

Engagement structures and alignment of policies with that of the Gold Fields Group

The new agreement will result in an up-front cost to South Deep of approximately R170 million.

"This is an appropriate investment in generating a new operating model, which will underpin the significant potential of South Deep. It will lead to more productive working arrangements, line-of-sight bonus system that align employees with business objectives, as well as competitive grading and compensation systems," Holland said.

"This is a win-win arrangement for the mine and all affected employees who will receive upfront payments, while the new working arrangements will enable them to participate in a joint reward system that is equal to or better than what they are currently receiving. Furthermore, South Deep will work with the trade unions to jointly develop improved housing arrangements, medical and wellness benefits as well as more efficient underground transport arrangements, amongst others," Holland added.

This agreement has resolved all outstanding and unresolved issues between the NUM and South Deep Management dating back to the strike in 2010.

"This agreement is reflective of our desire to establish South Deep as a world class mine for the next 50 years and more, to the benefit of all its stakeholders," Holland said.

South Deep is an important and strategic growth asset for Gold Fields and the South African mining industry, with production scheduled to ramp up to a run-rate of 700,000 ounces a year by the end of 2015, and a life of mine in excess of 50 years.


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