The South African gold-mining industry has been in a period of decline over the past 10 years and further consolidation of the sector is a logical move, such as the proposed merger of Harmony and Gold Fields, Harmony chief executive Bernard Swanepoel said on Thursday.
“The South African gold-mining sector is at a point where something is about to give. Further consolidation is inevitable during 2005 and could or should involve Gold Fields assets,” Swanepoel said.
In South Africa, Gold Fields has three gold mines, which are Driefontein, Kloof and Beatrix.
Gold Fields Driefontein mine could get savings and synergies from a tie-up with AngloGold Ashanti mines that are adjacent to it, and the Kloof mine could do the same with the South Deep mine, with is a 50:50 joint venture between Western Areas and Canada’s Placer Dome.
Regarding possible savings, if Harmony wins its bid for Gold Fields, Swanepoel said he will “absolutely” be speaking to Western Areas, Placer Dome, DRDGold or AngloGold Ashanti.
Swanepoel said he expects the first Competition Tribunal hearings about the proposed merger of Harmony and Gold Fields to start on February 25.
The Competition Commission is currently evaluating the proposed merger of Harmony and Gold Fields and will make its recommendations to the Competition Tribunal soon.
Regarding the delayed release of Harmony’s audited reserves and resources statement by Steffen, Robertson and Kirsten Consulting, Swanepoel said this statement will be out “some time” in 2005 and that parties interested in this matter shouldn’t hold their breath waiting for it.
When Harmony announced its bid for Gold Fields on October 18 2004, the company said its audited gold reserves and resources would be out by early December. There is no legal requirement in South Africa for a company to have audit reserves and resources.
The cost of Harmony’s bid for Gold Fields has amounted to about R100-million so far and could increase to R254-million if Harmony increases its stake in Gold Fields from 11,5% to above 50%, and could increase further to about R327-million if Harmony buys out and delists Gold Fields.
Harmony continues to aim at cutting its costs to R75Â 000 per kilogram by its June 2005 quarter, Swanepoel said.
As a result of the halt to continuous operations at Harmony’s Free Gold mines in the Free State, Swanepoel said there is surplus labour at the mine and legal notifications will soon be put out to begin the restructuring of the mines.
Over the next two or three months, restructuring at Harmony’s operations will continue with the last of the voluntary retrenchments being processed and possible forced retrenchments on the cards, he added.
Harmony continues to implement continuous operations at its Randfontein mines, and its Evander gold mine had also seen significant gains as a result of continuous operations, Swanepoel said. — I-Net Bridge