Anglo Platinum, the world’s largest platinum producer, has been forced to lower its expected 2007 production figures following the introduction of strict new safety measures being implemented across its mines.
“As a result of reduced labour efficiency and the implementation of a new approach to employee safety, refined platinum production of between 2,6-million and 2,65-million ounces is expected in 2007,” Anglo Platinum said in a statement accompanying its interim results on Monday.
The surprise resignation of Anglo Platinum CEO Ralph Havenstein, which was also announced on Monday, has been directly linked to the company’s new safety strategy.
Havenstein, who has been with Anglo Platinum for four years, will leave Anglo Platinum at the end of August this year.
Anglo American, which owns 75% of the company, wants to set the safety standard in the mining industry and has implemented a major shift in its approach to employee safety.
Concerns about Anglo Platinum’s safety record meant it was the first of the group companies to have to adopt dramatic measures.
“I believe Anglo Platinum needs new leadership and new insight to achieve these safety goals,” Havenstein told mining and analysts at a presentation of the company’s interim results.
Speaking at a results presentation, Havenstein said the effect of a safety review at its Rustenburg mine had been more severe than originally anticipated.
A complete suspension of production at its largest operation in Rustenburg was announced in June after 12 miners were killed at the operation in six months.
Anglo Platinum told the market the week-long shutdown to address the poor safety record at the operation would result in the loss of up to 15 000 refined platinum ounces, but on Monday, the company said the shutdown had resulted in a loss of 38 000 ounces due to the slow restart of the operation.
Havenstein said similar safety interventions at the company’s other operations would reduce 2007 refined platinum production by a further 65 000 ounces.
Safety of employees is expected to be further heightened by Anglo Platinum’s move from contractors to mine employment. The company currently has a high contractor component, and labour instability in the past six months, particularly unprotected strikes by contract workers, has contributed to escalating costs.
Cash mining, smelting and refining costs rose by 20,2% to R8,5-billion in the six months to end June 2007, with cash operating unit costs per equivalent refined platinum ounce rising by 19,2% to R7 200.
Anglo Platinum chief financial officer, Norman Mbazima, said the overwhelming contributing factor to increased costs was labour costs, with labour and contract labour costs comprising about 80% of the increase.
In addition, increasing competition for labour in South Africa, particularly from the new mining operations springing up on the Bushveld Complex and the booming construction industry, posed “a special challenge”, said Havenstein.
As part of the company’s resolve to end production inefficiencies, Havenstein said it would strengthen its retention packages and increase the intensity of its recruitment drive — not only in South Africa, but also in Africa. — I-Net Bridge