Gold Fields raises concerns over power costs at its South Deep mine - IOL
JOHANNESBURG – Gold Fields, the JSE-listed gold producer, yesterday raised concerns about escalating power costs at its South Deep mechanised mine in Carletonville as the group announced the return to a $71 million profit (R1.08 billion) in the six months to June from $367m in the same period last year.
The group said South Deep, Gold Fields’ only South African mine, incurred a 13 percent electricity tariff hike during the period.
Chief executive Nick Holland said South Deep’s annual power bill reached R500m, forcing the group to seek alternative energy sources.
“If that doubles in five years, that's another R500m for us a year,” Holland said. “What about the rest of the industry? How are they going to cope?”
Holland said structural inflation was a major problem for gold mining.
He said the group had conducted a study on a 40 megawatt solar plant.
“We are in a regulatory process now. We need approvals from the likes of National Energy Regulator. If we can get approval on a cost basis it makes sense from day one,” Holland said.
The gold miner said it would not call it quits at South Deep despite challenges at the mine. “We would not have gone through the massive pain of restructuring if we were checking out. We have improved discipline at the mine and the quality of management, that is not a sign of someone who is checking out,” he said.
South Deep reported a 67 percent productivity improvement to 57 000 ounces in the June quarter from 34 000 ounces in March following a slow start as the mine recovered from the restructuring and strike. South Deep cut a third of its workforce to improve efficiencies. It also suffered a violent six-week strike which ended in December.
Gold Fields, which operates in five countries, said attributable gold equivalent production jumped 9 percent to more than 1 million ounces from 994 000 last year.
The group declared a 60c interim dividend compared with R0.20 in the same period a year earlier, thanks to the improved bullion price. This was in line with its dividend policy to pay between 25 and 35 percent of its profit.
The average rand gold price increased by 16 percent from R518 504 a kilogram to R600 601 a kilogram.
Gold Fields turned net cash flow positive, generating $49m for the six month period from the net cash outflow of $79m in the first half of 2018.
Harmony Gold Company said yesterday it delivered a 17 percent increase in production of 1.44 million ounces in the year to June, in line with its guidance of 1.45 million ounces.
It said it expected headline earnings a share of between 191 and 226 South African cents – a year-on-year increase of about 12 percent to 32 percent compared to the previous financial year which was 171 cents.
Back to previous page