Sibanye-Stillwater concludes S189 process and its South African gold operations production guidance for 2019
Published by Claire Cuddihy,
Assistant Editor
Global Mining Review,
Sibanye-Stillwater is pleased to advise that it has successfully concluded the consultation process with relevant stakeholders in terms of Section 189A (S189) of the Labour Relations Act, 66 of 1995 (LRA), regarding the proposed restructuring of its SA gold operations and associated services, previously announced on 14 February 2019. The S189 process was a consequence of ongoing financial losses experienced at the Beatrix 1 shaft and Driefontein 2, 6, 7 and 8 shafts since 2017, with approximately 5870 employees and 800 contractors potentially being affected upon announcement.
The outcome of the S189 process, following consultations with stakeholders, is as follows:
- Job losses were nearly halved, with approximately 3450 employees finally affected by the restructuring. Voluntary separation, early retirement and natural attrition accounted for the bulk of the affected jobs, with forced retrenchments limited to approximately 800 employees and 550 contract workers.
- Pleasingly agreements have been reached with stakeholders that Driefontein 8 shaft will remain in operation for as long as it makes a profit, on average, over any continuous period of three months, after accounting for all-in sustaining costs, providing extended. employment for approximately 970 employees and 55 contractors. In the event that this operation becomes loss making again, it will be placed on care and maintenance with immediate effect.
- No viable alternatives were found for the Beatrix 1 shaft and Driefontein 2, 6 and 7 shafts, as well as Beatrix 2 plant. As such, Beatrix 1 and Driefontein 2 shafts will be placed on care and maintenance, while Driefontein 6 and 7 shafts and Beatrix 2 plant will be closed.
- Additional cost reductions are envisaged through the rationalisation of single accommodation units, training facilities, occupational healthcare centres and primary healthcare facilities amongst others.
In addition, strategic initiatives to allow for controlled rewatering, associated with a reduction in pumping costs, are being considered including rationalisation of pumping infrastructure at Driefontein 10 shaft Production guidance for the SA gold operations The build-up to normalised production at the SA gold operations, following the conclusion of the five month strike, is proceeding steadily. The re-training of employees and re-integration of work teams have been concluded and the environmental conditions in the working areas, many of which were dormant for months, have been restored to appropriate levels. In order to ensure that production is restored safely, a measured build-up in production will be taken, with normalised production levels expected in early 3Q19. As such the 2H19 production guidance is forecast between 16 000kg and 17 000 kg (514 koz and 546 koz), which is more reflective of forecast production levels prior to the strike and an implied annualised run rate of approximately 34 000kg to 35 000kg (1090 koz to 1150 koz). Annual production from the gold operations (excluding DRDGOLD) for 2019 including 1Q19 and 2Q19 (impacted by the AMCU strike) is forecast at between 24 000 kg to 25 000 kg (772 koz to 804 koz). Whilst the normalisation of production will significantly reduce unit costs in 2H19, higher than normal levels of capital expenditure (to compensate for capital underspend in 1H19) and restructuring costs, will result in temporarily elevated All-in Sustaining Cost (AISC) of between R590 000/kg and R630 000/kg (or US$1,350/oz and US$1450/oz) for 2H19. Indicatively, AISC would have been between approximately R550 000/kg and R580 000/kg (or US$1,260/oz and US$1330/oz) if a normalised, pre-strike forecast production and capital expenditure is assumed during 2H19. On an annual basis for 2019, AISC will remain elevated on average, at between R715 000/kg and R750 000/kg (or US$1640/oz and US$1725/oz), due to the higher unit costs from 1H19 as a result of the strike. Capital expenditure for 2019 is forecast at about R2350 million (US$173 million), which includes approximately R220 million (US$16 million) of project capital. Approximately R1900 million (US$140 million) of this capital expenditure has been scheduled for 2H19. The dollar costs are based on an average exchange rate of R13.55/US$.
Sibanye-Stillwater CEO, Neal Froneman commented: “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. We are therefore pleased to have concluded the S189 consultation and successfully reduced the footprint of the operations in a responsible manner and resulted in over 2650 potential job losses being avoided. Although restructuring is a difficult and emotive process, the sustainability of our remaining operations is our primary focus. To ensure further sustainability of the West Rand gold mines, avoiding premature mine closure will require an ongoing regional approach to reduce costs through the rationalisation of infrastructure and services, including a regional mine water management solution. We are now focused on restoring profitability at our SA gold operations in a steady and safe manner. Our SA gold operations recently achieved a record five million fatality-free shifts, during a particularly difficult and disruptive period, which is a noteworthy achievement.”
Read the article online at: https://www.globalminingreview.com/mining/06062019/sibanye-stillwater-concludes-s189-process-and-its-south-africam-gold-operations-production-guidance-for-2019/
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