Donna Block and Mungo Soggot
Management, unions and government officials were this week putting the finishing touches to the National Union of Mineworkers’s (NUM) rescue plan for East Rand Proprietary Mines (ERPM).
Sources close to the negotiations said on Thursday most obstacles had been cleared – including the possibility that the rescue plan would have to be backed by substantial bridging finance.
The mine was put into provisional liquidation on July 6, its profits having been savaged by the collapse of the gold price. The NUM recruited a former senior manager on the mine, Peter Camden-Smith, to help save the operation.
Camden-Smith has resurrected and modified a plan that would involve closing ERPM’s costliest shaft, and transferring all its 5 000 employees into the mine’s most profitable shaft. The main stumbling block raised so far has been the question of whether the plan will need to be accompanied by bridging finance. The liquidator dealing with the mine said last week it could need a cash injection of up to R40-million.
Union sources said bridging finance was likely to be necessary, but that it could easily be raised by taking out a loan against ERPM’s assets.
The Department of Minerals and Energy’s Jan Bredel, who has been the government’s main representative in the negotiations, said there had been “a few hiccups” in the talks, which were likely to run into next week. “We are still very hopeful,” Bredel added.
The government has had a hand in the talks after becoming ERPM’s main shareholder in recent years; the state has extended almost R500-million in subsidies to the mine.
The government has been under pressure to continue supporting the mine, but has indicated it does not want to continue its financial involvement in the mine.
The mine’s liquidator, Laurence Pereira, said he expected a final decision on the plan next week, adding that the mine employees’ work contracts had been extended to next Friday to allow the negotiations to run their course. The miners, many of whom are from neighbouring countries, were put on to temporary contracts after the mine went into provisional liquidation last month.