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Sibanye: ‘Tough decision’ could see 2 000 workers lose their jobs

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FIFI PETERS: More news of job losses at this time coming from the gold sector – well, ‘potentially’ is probably the more accurate description at the stage. Sibanye-Stillwater this morning announced that its Beatrix 4 shaft and Kloof 1 shaft units were not in great shape.

The company said that it is making losses and to save the other gold operations management was having to make tough decisions, and is entering into a Section 189 consultation process, which will involve seeing how best to move forward with these particular mines. The process could result in almost 2 000 workers at these operations losing their jobs.

For more on the story I’ve got James Wellsted, senior vice-president for investor relations at Sibanye-Stillwater. James, you and I spoke earlier and I’d like to understand, since you came to market with this announcement this morning [which is] not the best of news, what has happened until now?

JAMES WELLSTED: Good evening, Fifi, and good evening to your listeners. Up till now we have issued the notification that we’d entered into consultations this morning, and we’ve been engaging with stakeholders all day just in preparation for the consultation process. We’ve basically informed all potentially affected stakeholders, and are now preparing for that 60-day consultation that’s required in terms of the Labour Relations Act.

FIFI PETERS: Who are these stakeholders that you had to inform and how did the engagement take place? Via email, via phone?

JAMES WELLSTED: It’s quite a broad group of stakeholders, including the regulators, the labour department, DMRE [Department of Mineral Resources and Energy], etc, but also obviously unions, employees and their union representatives, community representatives, [and] with local municipalities.

Obviously we are aware of the impact that this is likely to have, not only on our employees but also on other stakeholders in the region.

So we are consulting quite widely and obviously with an event of this magnitude we are undertaking personal engagement.

So most of it has been either telephonic or face-to-face with suppliers, etc. If it’s a large group we do send out letters to inform them of what we’re going to be doing and the potential impact on them.

FIFI PETERS: And their response has been what? ‘We understand’, ‘we saw this coming’, ‘we are devastated’, ‘we are gutted’? Just give us a sense of how they’ve taken this news.

JAMES WELLSTED: At the moment it obviously varies between the stakeholders, so clearly this is going to have quite a significant impact, including on our business. It’s not something that is easily accepted and we just move on. We are going into a consultation process, though, and the aim of that consultation is to look for alternatives and to try and minimise the impact on job losses, etc, and on other stakeholders.

So we are going into the consultation with an open mind. We are looking for input from all of our stakeholders to try and find alternatives.

We have been through the same process at other operations. In fact, in 2017 we had a Section 189 at the Beatrix 4 shaft, which we’re currently going to be consulting on as well. We managed through that process to actually extend the life of that operation to the current day. So that was a successful outcome, and that’s exactly what this process is designed for.

FIFI PETERS: Can we expect the same success this time around for Beatrix 4 specifically?

JAMES WELLSTED: I can’t say. Obviously that would be pre-empting the consultation. We are in a difficult position because we are experiencing quite significant losses for various reasons at the Beatrix 4 shaft, and then also at the Kloof plant. The Kloof plant is at the end of its life. They have virtually no mineral reserves to support the continued operation of that plant. [For] Beatrix 4, we will have to engage with stakeholders and see what alternatives they can provide, or we can agree on, which might minimise the impact of what we are contemplating and what potentially could be the outcome of these consultations.

FIFI PETERS: In terms of alternatives? As you said, you’re trying to find alternatives, trying to find the best way forward here. Would that not just involve taking some of these workers to your other operations which are perhaps doing a little bit better, like in the platinum sector?

JAMES WELLSTED: It’s not as simple as that. First of all, obviously people have families, etc. It’s not as easy as just using them. People don’t necessarily want to leave; they are probably from local communities, etc.

We employ a lot of people from the local communities and they may not be that willing to necessarily leave. But we also don’t have a lot of capacity at our other operations.

As you know, we are heading into an economic downturn, and we are obviously trying to ensure that we can sustain our operations through any downturn, and we just don’t have the capacity to absorb people in other areas.

FIFI PETERS: James, when we were talking about how this happened earlier on, you spoke to me about load shedding and the impact that this was having on the costs of actually also keeping the mine open. I’d like to understand: if we didn’t have the record power-cuts situation that we have had this year could the situation be different for some of these workers at your gold operations?

JAMES WELLSTED: It’s difficult to say. It’s not just this year. Obviously the load shedding we’ve experienced recently has contributed to the problems, but this has been a long time coming. We’ve been engaging with the union through what we call the ‘future forums’, where we on a regular basis engage about operational issues and try and find solutions. So we’ve had those engagements. We haven’t been able to solve the issue with the productivity and profitability at Beatrix 4 and Kloof 1. So as a result we now have to go into this process.

But the reality is that these mines and operations are mature, many decades old and have been operating since the eighties/nineties, and they are coming to the end of their lives anyway.

We presented to the market last year that we will be in a declining phase of production from our gold operations as they reach the end of their economic mineral reserves anyway.

Within the next 10 to 15 years, unfortunately, we won’t be able to continue mining, so we will continue to reduce and consolidate the operations, and production will be declining.

But this industry is over a hundred years old. At the end of the day, unless we can go deeper – which technology doesn’t support at the moment, and from a safety perspective is difficult – it’s very difficult to imagine that we can continue mining for much longer than we already have done.

FIFI PETERS: And then what happens to these mines? They reach their sell-by-date, the life of the mine ends. What happens to the physical structure? It just stands there?

JAMES WELLSTED: No. Obviously resources are finite. As I say, over the years we’ve mined a significant amount of gold from South Africa. It has contributed over 40% of global production of gold over the decades, and we are reaching the end of those reserves with the current technology and what we can do currently without going deeper.

So what we do is we enter into closure – you’ll be aware that a lot of gold mines have closed over the last two decades – and we have put in place rehabilitation funding.

So what we’ll do is we’ll rehabilitate the operations, try and restore those areas to their prior pre-mining situations as much as possible. We’ll knock down the infrastructure, we’ll try and get it back to where it was, and then what we’ll try and do is implement [the restoration] with local communities, municipalities, etc.

We have plans to try and develop alternative economies – which we’re busy with at the moment, including agriculture and other [operations] – to try and create other industries that will survive and sustain beyond the mining operations.

FIFI PETERS: Oh, it sounds interesting. I look forward to engaging you further on those alternative plans and the new industries you’re looking to get into when you guys do come to market. But, just lastly, is there anything at this stage that the government can do?

JAMES WELLSTED: We obviously will engage government as one of the stakeholders that we’ll engage with. But, as I said, one of the issues is increasing electricity costs and the unreliable supply of energy that everybody in South Africa has experienced the last 10 years or more.

That has contributed to electricity costs – as a proportional percentage of our working costs – [going] from 9% in 2007 to over 20% at our gold operation now. So it’s become a significant factor that contributes to this kind of situation that we find ourselves in.

Obviously if we could solve the issues at Eskom and at the other parastatals, I think we all know that the economy would be a lot stronger than it is now and we’d be able to create more employment for longer.

FIFI PETERS: All right. Well, we hope we can soon solve the problems at Eskom following the recent pronouncement by government. James, we’ll leave it there. Thanks so much for giving us that detail. James Wellsted, the senior vice-president for investor relationships at Sibanye-Stillwater, was talking about the fact that a Section 189 consultation process has now been announced, and the company is going to talk to everyone who could be impacted – workers, unions, government and other stakeholders – over the next 60 days and will have a way forward for the workers at Sibanye Stillwater’s gold operations.

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