JSE and NYSE-listed Sibanye-Stillwater has begun consultations with organised labour and other stakeholders regarding potential restructuring of its South African gold operations, due to sustained losses and operational challenges at the Kloof 4 shaft in Gauteng. The announcement was made on Thursday, following a series of unsuccessful attempts to address productivity issues and other operational constraints at the site.
The Kloof 4 shaft has been grappling with a myriad of problems including seismicity and cooling constraints associated with the chilled water reticulation circuit. These issues have contributed to sustained losses, even amidst recent high gold prices, according to a statement by Sibanye. The situation was further exacerbated by significant damage to shaft infrastructure in late July, when an ascending counterweight to the conveyance system encountered an unknown obstruction in the shaft. This incident occurred during a safety trial run of the conveyance system prior to hoisting employees up the shaft, fortunately resulting in no injuries.
The company said these factors have led to a severe deterioration in productivity and jeopardised the financial viability of the Kloof 4 shaft; a site that produces more than 115,000 oz of gold annually. The possible restructuring could potentially affect 2,389 employees and 581 contractor employees.
Through the formal consultation process, as per Section 189A of the Labour Relations Act, Sibanye-Stillwater intends to consider measures alongside stakeholders to mitigate possible retrenchments and seek alternatives to potential cessation or downscaling of operations and associated services.
Richard Cox, Sibanye executive VP and head of the South African gold operations, affirmed that they will engage with all relevant stakeholders in an effort to avoid job losses while limiting the impact on the remainder of the operations and employees at the South African gold operations.
This announcement follows a similar situation last year when the company issued section 189 notices at its Beatrix mine and Kloof 1 plant. The process concluded in March this year, with approximately 170 workers retrenched, compared to some 19,500 jobs that were initially under threat.
Sibanye-Stillwater's results for the half-year ended in June were bolstered by a strong rebound in earnings from the SA gold business thanks to higher gold prices. CEO Neal Froneman stated last month that the market tends to generalise about the gold business being high-cost and unprofitable, but a large portion of the business was performing well. He added that these areas of the gold business that are not doing well "were being addressed" with several scenarios being considered.
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