7000 jobs at risk

Staff Reporter

Staff Reporter

Close to 7000 jobs, representing more than 12percent of Gold Fields' South African work force, are at risk as a direct result of the power crisis.

Gold Fields announced yesterday that gold production for the current quarter will drop by 20percent to 25percent against the December quarter.

This reflects "the total suspension of production for one full week due to power constraints, continued power rationing, and the seasonal impact of the Christmas break", the company said.

In order to achieve the 10percent reduction in electricity consumption imposed by Eskom, Gold Fields will close, mothball or scale back two shafts and another depth extension project at Driefontein, and two shafts at Kloof Gold Mine. This will affect 4900 workers at the two mines.

In addition, South Deep Gold Mine will be restructured with 2000 people potentially affected.

Problems at South Deep are not all power related, but its situation has been exacerbated by the power crisis. Production at Beatrix will not be affected.

Consultation with unions has begun, Gold Fields said in a statement yesterday.

Terence Goodlace, head of Gold Fields' South African operations, said Eskom's inability to supply the mines with their full power requirements, and to commit to additional electricity demand for new mining projects currently under development, has caused a significant crisis in the South African mining industry.

He said: "It's paradoxical that we have to consider downscaling in the current record-high gold price environment.

"To ensure sustainability of production and the security of the associated jobs, albeit at reduced levels, all available electrical power will have to be directed to higher margin, revenue generating shafts, at the expense of lower margin shafts and the Driefontein 9 shaft development project."

He said the group had diverted some electricity consumption to off peak periods, and it will divert available electricity to higher margin areasat the expense of lower margin areas and non-essential projects".

It is also looking at the feasibility of self-generation of electricity at some of its mines and will spend R200million on additional emergency power.

Reuters reported that AngloGold Ashanti had no plans to cut jobs at this stage despite a power shortage that will reduce its output for this year by 400000 ounces.

"We have not put in place any plans to lay off workers, it would be a last resort, but we obviously can't offer guarantees (that we won't have layoffs)," said Alan Fine, a spokesman at the world's third-biggest gold producer. - Additional reporting by Reuters