Sibanye leads gold stock sell-off on unrest

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LonminMine Independent Newspapers. Picture: Boxer Ngwenya.

Johannesburg - Sibanye Gold led losses among South African gold producers as work stoppages at the country’s platinum mines stoked investor concern that renewed labor unrest will curb output.

The stock fell to a record low, making it the second-worst performer on the 166-member FTSE/JSE Africa All-Share Index.

Harmony Gold, Africa’s third-largest producer, extended its decline as the biggest loser on the gauge this year, while Gold Fields headed for its lowest closing price in 4 1/2 years.

AngloGold Ashanti, the world’s third- biggest gold miner, also slid to its lowest since November 2008.

Mineworkers on May 14 began a strike that shut Lonmin’s Marikana platinum mine, where about 34 workers were killed in an Aug. 16 clash with police, igniting concern the unrest will spread.

Strain is also being placed on South Africa’s power system as Eskom, which generates about 95 percent of the nation’s electricity, deferred upkeep on some aging plants to the current winter months.

“The industry in South Africa is enduring something of a perfect storm,” Ryan Wibberley, a Cape Town-based trader at Investec Asset Management, said in an e-mailed response.

Lower metal prices, looming wage negotiations in the mining industry and government “meddling” with Anglo American Platinum’s plans to close shafts and cut jobs are also weighing on sentiment, he said.

Amplats, as the Anglo American Plc unit is known, last week said it was revising a proposal to cut as many as 14,000 jobs at its South African operations, reducing the number to 6,000, after the government intervened.

The National Union of Mineworkers will demand pay increases of more than 10 percent when negotiating with the Chamber of Mines, the labor union’s Secretary-General Frans Baleni said April 28.

Talks are due to begin next month, the Johannesburg-based chamber said May 8.

Gold Drops

Sibanye, operator of Africa’s largest gold operation, fell as much as 8.4 percent, the most since May 3, and traded 5.2 percent lower at 7.66 rand by 12:35 p.m. in Johannesburg, the lowest since it started trading on February 12 after being spun out of AngloGold.

About 1.4 million shares traded, 17 percent of the three-month daily average.

Harmony declined 4.9 percent to 37.10 rand, its worst level since May 2005, and extending its losses this year to 50 percent.

Gold Fields slipped 1 percent to 56.73 rand, heading for its lowest close since November 2008.

AngloGold, the third- worst performer on the all-share index, decreased 3.7 percent to 159.06 rand.

The spot price of gold dropped 1.5 percent to $1,372.08, the lowest since April 16, extending its losses for a sixth day. - Bloomberg News


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