The gold industry in South Africa will no longer exist in five years if conditions stay the same, executives at Gold Fields warned on Monday after lowering their production forecast for this year by 200 000oz due to wildcat strikes, a fire and operational problems.
The gold price, hovering at less than R498 000/kg, is the highest it has been, but South African gold producers are losing out on the boom as production ramps up after weeks of strikes, but slowly.
Gold companies are facing soaring costs and stagnant, if not falling, productivity levels.
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Gold Fields has just completed a "strategic portfolio review", which recommends a "critical review of declining and/or low-margin assets". The two such assets in South Africa are Beatrix and shafts at the Kloof Driefontein Complex (KDC) near Carletonville.
The company has come under pressure from some shareholders to separate its international assets from those in South Africa.
It was critical that gold miners stepped up productivity or job losses and shaft closures would become a reality, Gold Fields CEO Nick Holland said at a media briefing on Monday.
He said the company was looking for ways to protect jobs. When the gold sector starts two-year wage talks early next year, it will be critical to win union support for increased productivity.
"We are closer to the precipice than we were a few years ago. When we all look over the edge and see what’s down there, everyone becomes a lot more focused," Mr Holland said.
"There’s a necessity to do things differently. We’ve just gone through a very tough few months. We’ve gone through a cycle of continued job losses, a drop in production - the statistics are clear for all to see."
Chamber of Mines CEO Bheki Sibiya said last week that thousands of miners would be laid off early next year, possibly more than 10 000. Mining companies have been warning that the spate of wildcat strikes at platinum, gold, chrome and iron-ore mines since August would force a downsizing of their workforces.
National Union of Mineworkers general secretary Frans Baleni said there had been no discussions on productivity-linked wages. "We will consider the matter once it is presented to us, then seek mandate from our members," he said on Monday.
Article continues on page two: SA's gold production halved over the past five years...