Johannesburg - Sibanye Gold rallied 4.38 percent on the JSE to R58.81 a share early yesterday after it announced it would begin talks with unions on the future of its loss-making Cooke 4 underground mine and Ezulwini gold and uranium processing plant, signalling job cuts.
Shares closed at R58.38, 3.62 percent higher on the day.
The move would put about 2 500 jobs on the line if the country’s biggest gold producer decided to close operations due to underperformance and continued losses after the 60-day consultation period with the labour unions.
There were 1 700 permanent employees, and 800 contractors at the affected operations.
René Hochreiter, a mining analyst at NOAH Capital Markets, said the consultation on the future of Cooke 4 underground mine and Ezulwini came as little surprise.
Hochreiter said it was from an investor point of view.
Bleeding
“It stops the bleeding because Cooke 4 is an old shaft and is difficult to operate.
“It has had lots of underground fires over the years and high-cost multiple reef stopes that have threatened its viability and I am not surprised that it the company has taken these steps… The mine is not ‘working’ even when the gold price has reached R600 000 a kilogram,” he said.
Wayne Robinson, the chief executive of Sibanye Gold’s gold and uranium division, said yesterday that the Cooke 4 operations were unable to meet its targets.
“Ongoing financial losses threaten the viability of the rest of Cooke 4 operations and we have regrettably had to give notice to affected stakeholders and begin the consultation processes,” Robinson said.
Sibanye acquired four underground mines and two processing plants including Cooke 4 as part of a plan to get exposure to low-cost uranium and gold reserves in the Cooke surface tailings facilities. But the operations made a R4 million operating loss last year.
Sibanye led consultations in September 2014, which resulted in the company and unions deciding to implement certain measures to return the operation to profitability.
However, the interventions and the even firmer gold price this year has not helped turn around the Cooke 4 operations.
“Despite intense monitoring and interventions by a joint management and labour committee over the last 17 months, since the previous section 189 consultation was concluded, the Cooke 4 operations have continued to fall short of production targets and losses have continued to accumulate,” the company said.
James Wellsted, Sibanye’s spokesman said it was too early to say what the outcome of the section 189 would be. “As you know, we need to consult with stakeholders and try to find alternatives if possible before making a decision,” he said.
Any job losses were a blow for the mining industry, which has shed more than 30 000 jobs so far this year as companies were under pressure amid the subdued economic environment, soft commodity prices and rising costs.
Retrenchments
The National Union of Mineworkers (NUM) said it was shocked with the section 189 notice to retrench about 1 702 permanent workers at Cooke 4 and would be calling on government intervention.
“The NUM requests Minister of Mineral Resources Mosebenzi Zwane to intervene immediately to stop this drastic action by the company that will leave hundreds of mineworkers in a dire situation, as well as the surrounding communities in the West Rand,” it said.
Gideon du Plessis, the general secretary at trade union Solidarity, said there was hope the consultation process would bring alternatives to job cuts.
“There was a period where we explored all alternatives for almost two years. It did not yield results. We believe there are more alternatives to be explored. We believe people will be accommodated elsewhere in the business.”
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