Welkom mine restructure threatens jobs

Jobs for at least 400 workers at Masimong Mine owned by Harmony Gold Mining Company Limited near Welkom could be affected following a recent announcement by the mining giant that it was restructuring its operations in order to focus on its more productive operations.

Harmony said this when it announced its operational and financial results for the third quarter and nine months ended March 31, 2015, according to the company’s financial year.

The Masimong operation employs about 3 000 workers. It comprises a single operating shaft and an additional shaft used for ventilation, pumping and as a second outlet.

Mined ore is processed at the Harmony 1 plant some 20 kilometres away. Conventional drilling, blasting and scraping operations are focused on the Basal and B Reefs. The shafts are intermediate depth, extending to around 2 300 metres.
The company said owing to poor gold prices on the international markets, it would be restructuring its portfolio in order to cut costs and concentrate on the more profitable operations.

It said the lower gold price had forced it to rationalise its assets and the restructure its portfolio by cutting costs, reducing labour numbers and focusing on mining only safe, profitable ounces.

Corporate and investor relations executive Marian van der Walt this week told The Weekly that the company had not yet finalised on what would happen to those whose jobs would be affected by the restructuring.
“When we say 400 workers would be affected, it does not mean those workers will necessarily lose their jobs,” said Van der Walt in a telephone interview from her Johannesburg base.

“Laying-off the workers is the last thing we would like to do. The workers are most likely to be moved to other operations. We have been operating Masimong at a loss in recent months. We don’t really have much choice because of the low gold prices. We have to restructure our operations in order to stay viable,” she said.

According to Van der Walt, production at Masimong fell significantly in the last quarter resulting in 144 tonnes of ore being milled compared to 188 tonnes of ore processed in the quarter ending December 31 last year.
The operation produced 528kg of gold at the end of March quarter compared to 705kg produced in the previous quarter. The drop in the ore quality saw the mine only managing a yield of 3.67 grams of gold per tonne of ore compared to 3.75 in the last quarter.

Operating costs to produce a kilogramme of gold at that mine rose from R419 921 at the end of the December quarter to R516 945 in the March quarter.
“Just a couple of years ago Masimong had an economic lifespan of about 10 years but now because of the poor quality ore and low gold prices, the lifespan is now just two years. As a result, we have to continue to focus on the high grade areas,” she said.

In addition to the low prices, Harmony said gold production at its operations both in South Africa and Papua New Guinea for the March 2015 quarter was impacted by slow start-ups after the December 2014 holidays as well as safety stoppages. As a result, gold production was 10 percent or 817kg lower at 7 642 kilograms in the March 2015 quarter compared to the December 2014 quarter when they mined 8 459 kilograms.

Harmony also expressed fears that it would not survive high wage increases in the forthcoming collective bargaining period. It said if high wage increments were granted, massive retrenchments would be inevitable in the gold sector as operations were not very profitable at present.

“As Harmony we believe we pay our workers well and also look after them well in terms of their health and accommodation, among others,” added the Harmony Gold spokesperson.