About 400 jobs at Harmony Gold’s Doornkop mine on the West Rand are on the line after the operation stopped mining the Kimberley reef last month amid plans for the closure of this section as the soft gold price made it unprofitable.
The risk to jobs at the Kimberley reef comes against the backdrop of a challenging environment for gold producers that have downsized operations because of rising cost pressures coupled with a slump in the gold price last year.
Last year Gold Fields spun off its ageing local mines to form Sibanye Gold and reduced 4 600 jobs, mainly through voluntary severance packages and early retirement.
Meanwhile, Village Main Reef pulled the plug on its loss-making Buffelsfontien underground mine last year, resulting in the loss of 2 000 jobs.
AngloGold Ashanti said last year that 2 000 management jobs, or 40 percent of its managers, would be cut.
Harmony had cut its headcount by 1 000 through natural attrition and voluntary retrenchments since July 1 last year, Marian van der Walt, the corporate and investor relations executive at the country’s third-largest gold producer, said yesterday.
This included the restructuring of its Papua New Guinea operations.
The company plans to transfer the majority of the 400 staff at the Kimberley reef section of Doornkop to other operations, and it could not confirm the final number of job losses.
Van der Walt explained that the 60-day Section 189 process would conclude on January 19 and it was too early to estimate how many people would be affected by forced retrenchments.
To mitigate the effects of a volatile gold price, Harmony announced a strategy last year that included a R400 million cost-cutting plan, a R2.1 billion reduction in capital expenditure for this financial year and lower exploration costs.
Franz Stehring, the head of mining at Uasa, said he expected retrenchments at Doornkop to be reduced to minimal numbers following mitigation measures.
He said 120 Uasa members would be affected after a Section 189 notice signalling retrenchments was issued and the union was informed before Christmas of the intention to close production at the reef.
Doornkop is a single-shaft operation mining both the Kimberley and South reefs with around 4 000 permanent employees, including contractors. While production at the higher-grade South reef project would ramp up to full production in the 2016 financial year, the Kimberley reef was not viable at current gold prices, Van der Walt said.
The Kimberley reef operation was always earmarked for closure as the new South reef mine lifted output at a higher recovered grade, she said.
“Mechanised mining methods are used on the Kimberley reef horizon (mining high volumes at a much lower grade); this type of mining is extremely sensitive to gold price fluctuation and in the current gold price environment, the end of its economic life was brought closer.
“Closing the Kimberley reef will have a positive effect on both the costs and grade of Doornkop,” Van der Walt noted.
In January last year, Harmony locked out 6 000 staff at its Kusasalethu mine for safety reasons amid a violent strike.
The shares gained 1.28 percent to R27.60 yesterday.