Gold Fields faces strike at embattled South Deep over retrenchment plans - BusinessLIVE
In August, Gold Fields told the market that it would lay off 1,100 staff and 460 contractors
The National Union of Mineworkers plans to strike at the struggling South Deep mine owned by Gold Fields, over the company’s plans to lay off 1,520 people working at the unprofitable operation.
South Deep has sucked in R32bn to buy and develop but has yet to make money for shareholders, let alone pay back the capital, despite numerous plans and strategies since it took ownership of the mine in 2006.
In August Bank of America analyst Jason Fairclough described the continued downward revision of production targets and, more recently, the removal of production forecasts, as a “debacle” and wanted to know who, if anyone, would “fall on their sword”.
In August, Gold Fields told the market it would lay off 1,100 staff and 460 contractors, adding to the jobs bloodbath in the South African mining industry. The mine at the time was running up losses of R100m a month.
Gold Fields said the restructuring of the mine meant it was unlikely to reach the 480,000oz gold output it had forecast to reach in 2022 in a R3bn programme to bring it to completely mechanised production by then.
It is the last mine Gold Fields has in SA and it has run up losses of R4bn over the past five years as management tried and failed to successfully convert the mine to a large, deep-level, mechanised mine from the labour-intensive conventional mine it used to be.
An initial plan pegged output as high as 800,000oz a year by 2014, with a revision to 680,000oz a few years later. In 2017, the target was reduced to 500,000oz, using purely mechanised mining, keeping the number of employees low and as safe and productive as possible.
In early 2018, the target was dropped to 480,000oz of gold a year, and that number was subsequently taken off the table, with Holland expected to provide the market guidance in February 2019 about what the mine’s output will look like.
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