A consultation process with stakeholders regarding the restructuring of Sibanye-Stillwater’s gold operations, in South Africa, has resulted in expected job losses being nearly halved to 3 450.

When it embarked on the Section 189A process in February, the precious metals producer had expected 5 870 Sibanye employees and 800 contractors to lose their jobs.

Sibanye, which also owns platinum assets in South Africa and the US, embarked on the Section 189A process in response to ongoing financial losses at the Beatrix 1 shaft and Driefontein 2, 6, 7 and 8 shafts since 2017.

Sibanye on Wednesday said voluntary separation, early retirement and natural attrition accounted for the bulk of the 3 450 affected jobs, with forced retrenchments limited to about 800 employees and 550 contract workers.

“Agreements were reached with stakeholders that Driefontein 8 shaft will remain in operation for as long as it makes a profit, on average, over any continuous period of three months, after accounting for all-in sustaining costs, providing extended employment for about  970 employees and 55 contractors.

“In the event that this operation becomes loss-making again, it will be placed on care and maintenance with immediate effect,” the company said.

No viable alternatives were, however, found for the Beatrix 1 shaft and Driefontein 2, 6 and 7 shafts, as well as the Beatrix 2 plant. As such, Beatrix 1 and Driefontein 2 shafts will be placed on care and maintenance, while Driefontein 6 and 7 shafts and the Beatrix 2 plant will be closed.

“We are pleased to have successfully reduced the footprint of the operations in a responsible manner [that] resulted in over 2 650 potential job losses being avoided,” said CEO Neal Froneman.

“Although restructuring is a difficult and emotive process, the sustainability of our remaining operations is our primary focus. To ensure further sustainability of the West Rand gold mines, avoiding premature mine closure will require an ongoing regional approach to reduce costs through the rationalisation of infrastructure and services, including a regional mine water management solution.

“We are now focused on restoring profitability at our South African gold operations in a steady and safe manner,” he added.

Sibanye plans to achieve additional cost reductions through the rationalisation of single accommodation units, training facilities, occupational healthcare centres and primary healthcare facilities, among others, Sibanye added.

In  addition, strategic initiatives to allow for controlled re-watering, associated with a reduction in pumping costs, are being considered. These include rationalisation of pumping infrastructure at Driefontein 10 shaft.

PRODUCTION GUIDANCE
The precious metals miner on Wednesday also reported that the build-up to normalised production at the South Africa gold operations, following the conclusion of a five-month strike by Association of Mineworkers and Construction Union members, was proceeding steadily.

The re-training of employees and re-integration of work teams have been concluded and the environmental conditions in the working areas, many of which were dormant for months, have been restored to appropriate levels.

To ensure that production is restored safely, a measured build-up in production will be taken, with normalised production levels to be achieved early in the third quarter.

Sibanye expects its gold production for the second half of this year to be between 514 000 oz and 546 000 oz, which is more reflective of forecast production levels prior to the strike.

Full-year production from the gold operations (excluding DRDGold) is forecast at between 772 000 oz and 804 000 oz.

“While the normalisation of production will significantly reduce unit costs in the second half of the year, higher-than-normal levels of capital expenditure (capex) – to compensate for capital underspend in the first half of the year – and restructuring costs, will result in a temporarily elevated all-in sustaining cost (AISC) of between $1 350/oz and $1 450/oz.”

Indicatively, AISC would have been between $1 260/oz and $1 330/oz if normalised, pre-strike forecast production and capital expenditure were assumed for the second half of the year, said the company.

For the full-year, AISC is expected to remain elevated, on average, at between $1 640/oz and $1 725/oz, owing to the higher unit costs from the first half of the year as a result of the strike.

Capex for the full year is forecast at about R2.35-billion, which includes about R220-million of project capital.

About R1.9-billion of this capex has been scheduled for the second half of the year.