April 8, 2004

Thousands of miners face axe



The news follows the laying off of 4.000 workers at Durban Roodepoort Deep's North West operations in September last year, while junior miner Afrikander Lease closed its Klerksdorp mine in January, with 400 job losses. Harmony is hoping the move towards continuous operations (known as conops) at its other mines will reduce the number of retrenchments at the six affected shafts. Under conops, mines operate seven days a week instead of an 11-day fortnight and more workers are required for the extra shifts. "For the previous financial year we received R97.000/kg of gold produced. In the nine months to date our average received price has fallen 12% to R85.000/kg, and together with an average inflation rate of 7% at our operations, margins have shrunk from 26% to below 10% today,"
Dippenaar said. "It is probably irresponsible to continue mining unprofitable ounces as it erodes the profit base of the entire company.

The news is also considered further evidence of the difficulties in gold mining at South Africa's ageing operations, and one analyst said it vindicated Anglo American's decision to sell its stake in Gold Fields. The UK-domiciled resources group has already announced that it had sold its 20% stake in South Africa's second-biggest gold producer to Russian nickel and palladium giant Norilsk for R7.6-billion and booked a profit of 480-million. It said the proceeds would be used to reduce its local debt, currently at some $3-billion, and finance various capital programmes. (Sunday Times, Johannesburg)

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