Gold Fields warns of job losses over power crisis

Gold production for the current third quarter is forecast to decline by between 20% and 25% against the December quarter, Gold Fields said on Monday.

This was “as a result of the total suspension of production for one full week due to power constraints, continued power rationing, and the seasonal impact of the Christmas break”.

The mining company also said that as a consequence of the 10% power reduction imposed by Eskom, sustainable production at Gold Fields’ local operations was likely to decline by between 15% and 20% from the June quarter onwards.

Eskom has indicated that the current quota of 90% of average historic electricity consumption will remain in force for at least five years.

To achieve the 10% reduction in electricity consumption imposed by Eskom, the company proposed the following actions:

  • The number six and seven shafts as well as the depth extension project at shaft nine at Driefontein, and the number three and eight shafts at Kloof Gold Mine, are to be mothballed, closed or scaled back, potentially affecting approximately 4 900 employees.

  • South Deep Gold Mine is to be restructured as a result of the depletion of the Ventersdorp Contact Reef horizon above 95-level and a new strategy implemented which focuses primarily on the completion of the twin shaft infrastructure and development capital programmes.
“This, too, is unfortunately compounded by the power rationing.
The total number of South Deep employees potentially affected is approximately 2 000,” the company said.

Production at Beatrix Gold Mine is unlikely to be affected by the reduction in power supply.

“The total number of employees and contractors potentially affected at all of Gold Fields’ South African mines is 6 900 out of a total employee population of 53 000, Gold Fields said.

Engagement with all relevant role-players, including unions and associations, “have commenced with a view to ameliorating the impact on affected employees”.

“All alternatives will be considered to save jobs, including options such as early retirement, voluntary retrenchments, contractor replacement and redeployment elsewhere in the group.”

The National Union of Mineworkers, however, asked management to hold back on the issue of “section 189 letters” commencing formal retrenchment discussions, until the union had completed a series of meetings with the government and the Chamber of Mines, scheduled for February 26, 27 and 29.

Terence Goodlace, head of South African operations for Gold Fields, said: “The inability of Eskom to supply the mines their full power requirements, and to commit to additional electricity demand for new mining projects currently in development, has caused a significant crisis in the SA mining industry.

“It is paradoxical that we have to consider downscaling in the current record-high gold price environment.

“To ensure sustainability of production and the security of the associated jobs, albeit at reduced levels, all available electrical power will have to be directed to higher margin, revenue generating shafts, at the expense of lower margin shafts and the Driefontein 9 shaft development project.” - Sapa

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