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Gold Fields' latest South Deep restructure runs into trouble as NUM calls strike - MiningMX

Thursday, 1 November 2018

ATTEMPTS by Gold Fields to deliver profits at South Deep, its west Rand mine, received another body-blow today after the National Union of Mineworkers (NUM) served the group notice to strike at the mine from November 2.

This follows a proposal by Gold Fields to stem negative cash flow at South Deep in which just over 1,200 employees and 420 contractors would be retrenched. The restructuring is yet another effort to improve the mine’s performance after 10 years of loss-making.

The group said it may have to temporarily stop mining if the safety of employees was in question. NUM represents roughly 80% of the mine’s total workforce.

“We have reached a critical stage in the restructuring at South Deep, which follows on previous unsuccessful initiatives to improve productivity,” said Gold Fields CEO Nick Holland in a statement. “The restructuring will help to reduce the risk of continuing operating losses and consolidates the current mining operations as a first step to building a sustainable, long-term operation.

“Unfortunately, the retrenchments and the reduction in contractor numbers have become essential to ensure this and save the remaining 3,500 jobs,” he said, adding that South Deep was a “well understood” orebody and that the group believed it could bring it into profits “over the next few years”.

This latest restructuring was announced on August 14. It also said at that time it would impair the mine by R4.8bn taking total impairments for the year to R8.3bn. This followed a R3.5bn impairment in February.

At that time, Gold Fields was unable to give new production guidance for the remainder of the year or the 2019 financial year and said that previous production guidance for 2018 of 322,000 ounces could not be relied upon. Production in the second quarter totalled 49,000 oz – not much better than the 48,000 oz in the first quarter despite Gold Fields ringing in the changes by introducing shift changes.

Commenting on the looming strike, Gold Fields said that consultations with the NUM, as well as UASA, another union, had been “extensive” and included an offer of voluntary severance packages, which had been taken up by 177 employees.

“Despite these efforts South Deep still has to reduce its workforce by approximately 1,100 staff members and retrenchment letters were sent to these employees on 31 October 2018. In addition, the mine will reduce the number of contractors by approximately 420 people,” it said.

The selection criteria used to determine which employees would be affected were part of the Section 189 consultations and included length of service, performance and competency criteria and attendance records. The ‘no work, no pay’ principle will apply for the strike, it said.

“We respect the laws that allow for a peaceful, legal strike, but we are very concerned about the further impact that industrial action will have on the mine – and on our employees, with potentially more job losses,” said Holland.

Gold Fields is scheduled to announce South Deep’s latest production performance as part of the Group’s third quarter operational update November 9.

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