JOHANNESBURG – Sibanye-Stillwater on Wednesday cut its cash-bleeding gold shafts and shed more than 3400 jobs as part of the restructuring of its gold operations in South African.
Sibanye-Stillwater, which became the world's biggest platinum producer after shareholders approved its merger with Lonmin last week, said that 3450 employees would lose jobs as it closed Driefontein 6 and 7 shafts and Beatrix 2 plant.
The miner put Beatrix 1 and Driefontein 2 shafts on care and maintenance.
It said the lay-offs were half of the initial 5870 employees and 800 contractors forecast to be shed in February when it announced the possible restructuring of Beatrix and Driefontein mines, which have been on life support since 2017.
Sibanye-Stillwater said it halved the numbers following a formal consultation process with organised labour in terms of section 189 of the Labour Relations Act.
Chief executive Neal Froneman said in a statement that more than 2650 potential job losses were avoided following the consultation process.
“Although restructuring is a difficult and emotive process, the sustainability of our remaining operations is our primary focus,” Froneman said.
Sibanye-Stillwater said voluntary separation, early retirement and natural attrition accounted for the bulk of the affected jobs, with forced retrenchments limited to about 800 employees and 550 contractors.
It said it gave Driefontein 8 shaft a lifeline as it made money, extending job security to 970 employees and 55 contractors.
However, the group said it would place the shaft on care and maintenance if it becomes loss-making again.
South Africa’s economy contracted 3.2percent quarter-on-quarter, following the five-month-long strike led by the Association of Mineworkers and Construction Union at Sibanye-Stillwater’s gold mines.
Froneman said the company was focused on restoring profitability at its South African gold operations in a steady and safe manner.
“We have come through a difficult period, but have strategically positioned the group for the platinum wage negotiations and the integration of Lonmin. Restructuring and consultations proceeded despite the ongoing strike,” said Froneman.
The restructuring comes as Top 40 mining company AngloGold Ashanti last month flagged that it was plotting an exit from South Africa and would review divestment options from its Mponeng mine to focus on higher return assets elsewhere.
Rene Hochreiter, a mining analyst at Noah Capital Markets, said Sibanye-Stillwater was closing down old end-of-life and loss-making shafts, and would keep shafts going as long as they make money.
“Longer-term there is no doubt that South Africa gold mining is terminally ill and will be producing less than 100 tons a year in the next two years, a 90percent collapse of production since 1980.
“The only thing that will save South African mining from total government incompetence, a Cabinet loaded with failed leftist dogma and super-unproductive labour will be the rand falling to $20, which I now see as a certainty,” Hochreiter said.
Sibanye-Stillwater said its annual output would be hurt by the strike and forecast 2019 production from the gold operations excluding DRDGold at between 24000kg and 25000kg (846575 ounces to 881849 ounces).
Sibanye-Stillwater shares closed 1.44percent higher on the JSE yesterday at R14.81.