Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
South African miner Gold Fields (NYSE, JSE:GFI) revealed Thursday the biggest union at its massive, but struggling South Deep mine is going on strike on Friday over the company’s planned job cuts, which Chief Executive Officer Nick Holland has called a “last-gasp measure.”
The gold miner is axing about 1,100 jobs, almost third of the workforce at the mine — its only one left in South Africa — as it mechanizes operations to lower costs and deals with challenging geology.
The National Union of Mineworkers (NUM), which represents around 80% of the employees at the mine, will down tools on Friday.
“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,” Holland said in the statement.
The Johannesburg-based firm noted it might consider temporarily halting production at the mine, which stretches 3km underground and contains the majority of gold reserves left in South Africa, accounting for 60% for the company’s mineral reserves.
The National Union of Mineworkers (NUM), which represents around 80% of the employees at the South Deep mine, told management it would down tools on Friday.
South Deep was built to target the world’s second-biggest known body of gold-bearing ore and slow the steady decline in the country’s production. But in the last ten years, the mine has not made any money for its owner. Even worse: in the past five years it has caused the company to lose 4 billion rand (about $282 million).
Overall, the company has sunk over 9 billion rand ($620 million) into the mine, not counting the 22 billion rand it paid to buy it in 2006.
Gold Fields will announce South Deep’s latest production performance on Nov. 9, when it releases its third quarter results.
Comments
allritejack
Totally predictable and as I have said before, if they can overcome the great problems of mining South Deep, the intransigent labour force & ANC interference will never allow it to be profitable. They should cut their losses & a few responsible heads & move on. Let the clever ANC Executive have a shot at running it.