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Friday, 22 February 2019 09:39

Financial Mail reports that, in its results for the year ended December 2018 released last week, Gold Fields said production across the global gold mining group slipped 3%, while revenues were 7% lower.

Losses for the year slid to $348.2m, compared with $19m the year before.

Much of it has to do with South Deep. Though it has one of the world’s largest gold deposits, the mine hasn’t reached production targets for a long time and has proved to be a black hole for Gold Fields cash, guzzling about R100m a month.

The mine was massively restructured in 2018 — a painful and costly process — and Gold Fields expects to see the benefits, soon.

This involved retrenching 1,100 employees and as many as 500 contractors.

It also resulted in the closure of some lower-grade areas.

"It is the first time we’ve done something like this at South Deep and we believe it’s set us up to have a new start at the asset," said longtime Gold Fields CEO Nick Holland at the results presentation.

For the SA operation, it’s do or die now.

All Gold Fields wants from South Deep in 2019 is that it breaks even.

But what if it doesn’t, analysts asked Holland at the presentation.

"We’ve asked ourselves that question, our board has asked us that question," he said. The major restructuring — which has never been done before — has left Gold Fields feeling like it has to give it a go. "But that’s not to say we can continue just putting money into this month after month," he said.

"I have no appetite to do that. I’m also a shareholder in this company. And if we’re going to have a repeat of that, there won’t be a future. There has to be a step change, and soon."

Gold Fields says it will implement a number of initiatives at South Deep including improved drilling and blasting, rigorous performance management, improved fleet utilisation and better stakeholder management.

But investors remain sceptical.

Yatish Chowthee, equity research analyst at Macquarie, notes that many of the plans Gold Fields presented have been recurring themes over the years.

"These things have been there for a while. What makes it different now?" he asks.

Martin Preece, Gold Fields executive vice-president for SA, says: "It is an old story— the difference this time is the nature of restructuring. We’ve taken, I think, fairly bold steps to completely relook at the business. I think we’ve taken complexity out, taking a lot of the low-grade areas out."

He says the layoffs formed part of a selection process to leave the operation with "fewer, better people".

Holland said the company always knew what it had to do but is now focused on tightening up the execution of this.

As if the pain taken at South Deep wasn’t bad enough, Gold Fields, like all other energy users in SA, has Eskom to worry about.

The ailing utility is in financial and operational crisis and on Monday last week implemented stage 4 load-shedding to move 4,000MW from the national power grid to prevent collapse — the highest level of power cuts yet.

Holland said South Deep could work around as load-shedding long as it didn’t go to stage 4. He said Gold Fields has been working on a renewable power solution, which could provide 25% of its sizeable 60MW needs.

Plans stalled during the South Deep restructuring, but it’s now time to "dust that off", he said. "My feeling is, though, this problem with Eskom is a big problem that’s not going to be solved quickly … Business is going to have to create its own solutions."

In the background there has been a flurry of mergers among large gold miners, which has prompted speculation about who might be next.

Gold Fields last month quickly denied a report that it would merge with AngloGold Ashanti, and Holland reiterated he won’t be drawn on speculation but noted: "We don’t feel compelled to do anything except to focus on our projects."

In the context of few new discoveries and capital drying up, mergers make sense, but in the case of Gold Fields it saw the writing on the wall and took steps to prevent this.

"In 2016 we took a decision to run the company cash negative for two years to give us better projects," said Holland. "Our focus is delivering our strategy. Never say never, but it’s not our focus right now."

Gold Fields says it is now on track to produce over 2-million ounces of gold a year for the next decade, starting in 2019.

Capital expenditure will drop in the first half of 2019 and as production ramps up, the company is expected to become cash flow positive in the second half of the year with an assumed gold price of $1,200 per ounce.

"We believe this is likely supported by completion of the South Deep mine restructuring, removing more than $800m from the company’s cost base, and new gold volumes of about 59,000oz from the [Australian] Gruyere project," say Bloomberg Intelligence analysts. "Total attributable gold equivalent production this year may exceed 2017 and 2018 levels."

Read the original of this report by Lisa Steyn at BusinessLive

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Monday, 18 February 2019 10:08

Business Times reports that Gold Fields CEO Nick Holland says that consolidation cannot save SA's gold sector and job cuts are likely to continue.

Holland, whose company has been linked to a possible merger with larger rival AngloGold Ashanti, told Business Times: "There might be some local gold assets that can be moved around, but I think consolidation in the South African industry has largely happened."

With a 132-year history in SA, Gold Fields is one of the few remaining pure gold miners at a time when companies like Sibanye-Stillwater are working to offset gold losses with revenues from platinum operations.

Holland has long held the view that consolidation is good for deriving synergies in the local sector.

Six years ago, Gold Fields unbundled its labour-intensive operations — Kloof, Driefontein and Beatrix mines — into Sibanye, which this week said it was cutting 6,670 jobs to curb losses.

Reflecting on that deal, Holland said: "There's not too much left to happen in SA. I think it's more globally where the opportunities lie."

Ian Cruickshanks, an independent analyst, thinks it's better to have two major gold miners in the country for competition. AngloGold has said it wants to cut ties with SA and a merger would go against that intention.

"I don't see any alternatives there except to carry on as separate entities," said Cruickshanks.

Gold mining is seen as a sunset industry. Regarding its future, Holland admitted: "If you look at the deep-level, conventional, labour-intensive mines, you'll find that they're getting deeper, the grades are declining, the costs keep going up, the trade unions keep getting increases that are beyond inflation when productivity doesn't match it.

"Eskom now wants to get a lot more money, so I think the writing is on the wall. It's not looking good."

The crown jewel of the group is its loss-making South Deep mine, the only mechanised gold mine in the country. More than R32bn has been invested since its conception in 2006.

"We're a little bit different because we're mechanised and we have a large ore body ahead of us and we're shallower than some of those deep-level mines," said Holland.

He remains steadfast in his belief that the mine can still turn in a profit. Analysts have questioned whether Holland and his team will turn around operations.

Holland, 59, has been at the helm since 2008. When asked if he was ready to hand over the reins, he said: "I still have an appetite to lead the company."

Cruickshanks said Holland has been managing as well as anybody else might have done in extremely difficult circumstances over the past few years.

"What I'd like to see is more signs of a succession plan. If something happens, who takes over? The company owes it to the investors to make a plain succession plan available."

Holland said Gold Fields has fixed South Deep's cost base. "The grade on the operation is well understood. Now it's a question of getting the volume. Drive the volume and you'll bring down the cost because of the fairly high fixed cost component of running an operation with the level of infrastructure that we have there."

Gold Fields has brought in three consultants from Australia — where many mines are already mechanised — to assist with operations.

"They're helping us to improve our whole value chain of mining, planning, execution — things like drill or blast, our mechanisation and our fleet management," said Holland.

South Deep has had major restructuring in the past year, reducing its workforce from about 4,000 to 2,460.

This restructuring was met with strong opposition from labour. The National Union of Mineworkers went on a 45-day strike at the end of 2018. The strike cost Gold Fields about R360m in lost revenue, according to its own calculations.

"Gold is only 1% of the country's GDP now. It's not that it's not relevant anymore, but we've seen gold decline year after year for the past 25 years. That trajectory won't change and we have to accept there's a lot of job losses that will probably still happen in the gold industry," said Holland.

On Friday, Gold Fields announced an 82% drop in normalised profit for the 2018 financial year compared with 2017. The group — which has a presence in SA, Ghana, Australia and South America — has seen its share price down 44% from its high in August 2016.

The original of this report by Mudiwa Gavaza appeared on page 1 of Sunday Times Business Times of 17 February 2019

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Monday, 18 February 2019 07:02

The Sunday Independent reports that there is no end in sight in the standoff between the National Health and Allied Workers’ Union (Nehawu) and the Department of Higher Education and Training (DHET) at vocational colleges across the country.

The department said it was committed to resolving the issues amid the union’s threat to continue with its industrial action on Monday. Lecturers at Technical and Vocational Education and Training (TVET) colleges and Community Education and Training (CET) colleges said little has changed since they migrated from the Department of Basic Education to DHET.

Nehawu this week said it will not back down on its demands for the introduction of a new salary dispensation, better working conditions, the transfer of all college-paid lecturers into the Persal system and the removal of the director-general, Gwebinkundla Qonde. Nehawu spokesperson Khaya Xaba, said the strike will continue indefinitely until their demands are met, adding that the union declined to meet with the minister as they were allocated only an hour.

“Yes a meeting was requested by the minister but was declined because they allocated us an hour to resolve all issues,” said Xaba.

Meanwhile, lecturers said little had changed since they registered their grievances.

“Nothing has changed since we moved. Only the status changed; we are now lecturers but when it comes to salaries and the conditions of employment, nothing has ever changed,” said Nehawu branch chairperson Themba Plaatjie, adding that they were fed up with working under the uncertainty of being contract workers with no benefits and stability.

“Lectures don’t have benefits, medical aid. Most lectures are hired in what we call ‘instructional hours’, which means you work for 2 and 4 hours. How do you pay someone what is not even equal to the minimum wage? We are not entitled to pay progression and 13th cheque. When a lecturer is sick, they must go to a public hospital yet you have directors who are paid exorbitant amounts of money.”

Meanwhile, DHET spokesperson Lunga Ngqengelele said the minister wrote to Nehawu on Wednesday, requesting a meeting as a sign of his commitment to resolving the issues.

“Lecturers in the CET colleges are appointed against the operational hours of each Community Learning Centre (CLC). The operational hours vary from centre to centre depending on the subject/courses offered and whether or not the centre has its own infrastructure and/or full-time staff. Most CLCs do not have their own facilities and operate from schools and as a result only teach after school hours,” said Ngqengelele.

Amid the stand-off over transfers some CET college lecturers said they remained unpaid for services they rendered, a situation the department said would be resolved.

“When CET lecturers were transferred to the department, some were paid fixed amounts and were on the payroll of the previous employers.

“These lecturers continue to receive their monthly salaries.

“The other type of lecturers were paid through a claim system, meaning that the centre managers must submit certified claims on a monthly basis with a certification that the hours claimed were indeed offered.

“This has been the case for lecturers in KwaZulu-Natal and the Western Cape because they are mainly full-time educators.

“The department has since approved that they be moved to a fixed hourly system and it is being implemented. It, however, required that the department conducts a verification audit to avoid paying people who do not teach in the CLCs and the verification has since been completed,” said Ngqengelele.

Despite reported disruptions at some colleges, he said the current assessment of the strike indicates that not all colleges and campuses have been affected.

“There have been reported cases of intimidation to force students and lecturers out of classes. Colleges have been advised to apply for court interdicts where intimidation occurs. Initiatives will be put in place to ensure that lost teaching and learning time is addressed.”

Ngqengelele said the department had committed to signing two agreements regarding the permanent employment of the remaining TVET and CET support staff, and a settlement agreement facilitated by the secretary- general of the General Public Service Sector Co-ordinating Council but Nehawu had not signed.

The original of this report by Lerato Diale appeared on page 6 of The Sunday Independent of 17 February 2019

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Monday, 18 February 2019 04:57

City Press reports that Moipone Tabi was shocked to find a community literally living in the shadow of death around massive open pits left by illegal sand miners. The rural community in villages near Hammanskraal – Dilopye, Suurman and Swartbooistad – had seemingly accepted their lot as a normal way of life.

Children risked their lives daily, walking to school past the pits that filled up with water during the rainy season.

Farmers constantly lost their goats and cattle which accidentally fell into the pits.

Tabi, a community activist based in Marikana in North West, was even more surprised to find that locals did not even know that extracting soil constitutes mining and that the community had a right to stop the practice.

“People have a voice but don’t know how to use it [against illegal sand miners],” said Tabi during a session of the 10th Alternative Mining Indaba (AMI) in Cape Town last week.

The indaba was established by NGOs, civil society and community groups in response to the African Mining Indaba, which is a platform for captains of the mining industry to discuss ways of maximising profits and growing their businesses.

The AMI, on the other hand, gives communities affected by mining the opportunity to share their experiences and build solidarity against mining companies. The events run during parallel times in the same city.

While the focus on illegal mining has been on those involved in the mining of minerals such as gold and diamond, indications are that illegal sand mining happens on an even greater scale and poses a big risk to communities.

Sand and gravel are used in construction and in the manufacture of cement. Rapid development and a greater need for new roads and buildings for residential, business and industrial use continue to push the demand for the resources.

“It [illegal sand mining] leaves a big negative impact on communities. Even land for human settlement is taken up because of illegal sand mining,” said Tabi.

In a 2014 report titled Sand, rarer than one thinks, the UN Environmental Programme (UNEP) says sand and gravel account for the largest volume of solid material extracted globally.

It also says sand and gravel account for the highest volume of raw material used on earth after water. UNEP warns that the resources are now being extracted at a rate far greater than their renewal and that the volume of extraction is having a major impact on rivers, deltas, and coastal and marine ecosystems.

This, according to the organisation, results in loss of land through river or coastal erosion, lowering of the water table and decreases in the amount of sediment supply.

Kgosi Oscar Mosielele, a traditional leader in the Moshupa subdistrict of Botswana, says the scourge of illegal sand mining “has reached catastrophic levels” in the area. He says illegal sand mining led to the deaths of three people in the district last year alone. Mosielele says the loss of livestock which are trapped in the gaping pits after falling in there accidentally is even greater.

“You will be surprised that some of this illegally mined sand builds our roads and government offices,” says Mosielele.

He says a combination of a lack of government will and the complicity of influential people in public Have you or your community been affected by illegal mining? How was it handled? SMS us on 35697 using the keyword SAND and tell us your experiences. Please include your name and province. SMSes cost R1.50. By participating, you agree to receive occasional marketing material office posts dealing with practice and legislation issues makes it difficult for traditional leaders to tackle illegal sand miners.

Although illegal sand mining impacts on communities, they hardly derive any benefit from the activity.

“They [illegal sand miners] don’t mind digging near homes. They actually sell the soil back to the very same communities at ridiculously low prices,” says Tabi.

In a study titled The Regulation of Sand Mining in South Africa (Stewart Christopher Green, University of Cape Town) sand mining is described as “relatively unsophisticated and rudimentary”.

Green lists the basic equipment of a sand miner as a bulldozer to clear vegetation and build access roads; an excavator or front-end loader to scoop up sand from the deposit; and trucks to cart the sand away.

“The barriers to entry are, therefore, low and a sand mining operation can be set up with relatively low costs.

“In fact, sand mining is ideally suited to small-scale miners and new entrants to the industry. Profits on the sale of sand can be high, making this industry quite lucrative.”

Glen Monye, a community land rights activist based in Mokopane, says the practice is widespread in villages around the Limpopo town and proposes that there needs to be a concerted effort to educate communities about their rights.

“The issue of sand takes a back seat compared to mineral mining such as diamond and gold. Communities need to be taught how to deal with this,” says Monye.

Tabi says that during workshops held with communities affected by illegal sand mining, it was apparent that most people who were landowners did not know their rights or understand how to deal with illegal sand miners.

She says one of the areas being targeted by illegal sand miners in the Hammanskraal area was in fact earmarked for platinum mining but the landowners didn’t even know about this.

The extraction of sand is protected by the Mineral and Petroleum Resources Development Act of 2002 that stipulates that anyone wishing to mine sand needs to apply for a permit from the department of mineral resources. However, it appears that sand miners simply ignore this regulation.

In 2014, environmental management inspectors, or the Green Scorpions, from the department of environmental affairs went on a countrywide blitz, targeting illegal sand miners.

The operation led to legal action being taken against at least 20 people and companies arrested during the operation.

Although the operation was deemed a success it focused on large-scale miners, meaning that small-scale illegal operators affecting communities like the Hammanskraal villages continue to operate.

In 2016 the department of water and sanitation applied for a court interdict to stop a company without proper permits from mining sand in KwaZuluNatal, one of the areas most affected by illegal mining.

Mosielele says that, in Botswana, the department tasked with regulating mining often cites a lack of resources as one of the challenges impacting on their ability to deal with illegal sand miners.

He says traditional leaders struggle with the issue due to legal challenges, because customary law is superseded by civil law, rendering chiefs powerless against the perpetrators.

“It is not very easy. As a chief my powers are limited. We can’t deal with these cases in our [traditional] courts,” he says.

Tabi says illegal sand miners need to be regulated and monitored in the same way government deals with artisanal miners.

“Why are sand miners not registered and [yet] are referred to as miners but we call others [zama zamas] artisanal miners?”

She says the spiritual connection to the soil needs to be respected as in many communities and societies it is not only viewed as a resource used for construction and industrial use.

“Our umbilical cords fell on that soil. We have a connection [to it] that cannot be explained,” she says.

The issue of sand takes a back seat compared to mineral mining such as diamond and gold. Communities need to be taught how to deal with this

The original of this report by Mukurukuru Media appeared on page 13 of City Press of 17 February 2019

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Thursday, 14 February 2019 13:37

The Star reports that another Gupta-owned company, Shiva Uranium, has resumed retrenching its workforce amid attempts to rescue the ailing mining firm.

Shiva Uranium’s business rescue practitioners Chris Monyela and Juanito Damons announced that Shiva Gold in Hartebeestfontein, North West, had been placed under care and maintenance and the process of retrenching employees had started.

They said an agreement to retrench employees had been signed.

At Shiva Coal in Brakfontein, Mpumalanga, there is ongoing production, with overheads being taken care of by the mining contractor.

National Union of Mineworkers Matlosana regional secretary Masibulele Naki told Independent Media yesterday the process of retrenching the remaining workforce had started, with Shiva Uranium employees undergoing medical examinations that would confirm they were employable in the industry and elsewhere.

According to Naki, Shiva Uranium’s medical station has capacity to conduct medical exit examinations of six mineworkers a day. He said workers should not only be paid retrenchment packages but the salaries Shiva Uranium stopped paying them last year.

By November, the employees were owed about R8.2 million at Shiva Gold while outstanding salaries stood at almost R2m at Shiva Coal.

Naki said before the initial round of retrenchments Shiva Uranium had a workforce of around 600.

The retrenchments come as the legal battle over Shiva Uranium heads back to court after two business rescue practitioners lost their North Gauteng High Court bid to be recognised.

Mahomed Tayob and Eugene Januarie have asked Acting Judge Mokhine Mosopa to grant them leave to appeal the judgment he handed down in December which dismissed the two business rescue practitioners’ application to interdict the Companies and Intellectual Property Commission (CIPC) from implementing the Companies Tribunal’s decision not to recognise them.

Tayob and Januarie say the high court erred in fact in holding that it was necessary for the second business rescue practitioner, Monyela, to give his approval of the appointment made by Shiva Uranium’s board.

“In doing so the court subordinated the correctly taken decision of the board to an incompetent individual not entitled to act for the company on his own,” reads Tayob and Januarie’s application for leave to appeal.

They argue that the correct interpretation of the law requires that on the question of the appointment of a business rescue practitioner in the wake of the resignation of a duly appointed business rescue practitioner, the board alone is competent to make the appointment and does not require the approval of any remaining business rescue practitioner.

“The court erred in approving the appointment of the third respondent (Damons) as a business rescue practitioner to the first respondent (Shiva Uranium) under circumstances where the first respondent, acting through its directors, had not made the appointment of the third respondent,” say Tayob and Januarie.

Tayob and Januarie had wanted the high court to review and set aside the tribunal’s November decision and declare them and Monyela the duly and lawfully appointed business rescue practitioners of Shiva Uranium.

But Judge Mosopa found Monyela’s appointment was not unlawful and that he was competent to remain Shiva Uranium’s business rescue practitioner.

“However, in due regard of the fact that the first respondent (Shiva Uranium) is a large company, the company or the creditors who appointed the practitioner who resigned must take all the necessary steps to ensure that a senior practitioner(s) is appointed to fill the vacant post left by Cloete Murray,” stated the judge.

Murray resigned in September and Shiva Uranium chief executive George van der Merwe, one of the company’s two directors, appointed Tayob and Januarie as joint rescue practitioners.

The CIPC rejected Damons’s appointment because of potential conflict of interest but Monyela successfully requested the tribunal to recognise him.

The original of this report by Loyiso Sidimba appeared on page 25 of The Star of 14 February 2019

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