Sibanye Considers Closing Unprofitable Shafts at Gold Mines

(Bloomberg) -- Sibanye Gold Ltd. is considering shutting unprofitable shafts and cutting jobs at its South African gold mines amid a three-month-old wage strike that’s curbing output.

The nation’s largest gold producer has talked with some labor unions about a potential restructuring, which could lead to job cuts, said Sibanye spokesman James Wellsted. Rising costs, including higher power prices, are undermining the economic viability of its gold operations, he said. Three of the company’s gold mines are also facing a strike by thousands of workers allied to the Association of Mineworkers and Construction Union.

“There is a possibility that if we don’t find solutions that there may be restructuring, which entails closing some of the operations and possible job cuts,” said Wellsted. “We can’t carry on unprofitable shafts as it means we are taking money from one area and pouring it down the drain.”

Sibanye Chief Executive Officer Neal Froneman said earlier this month that he won’t increase the wage offer to AMCU after three other unions signed a pay deal with the miner. The company said it’s informed the Department of Mineral Resources about the possibility of restructuring, a prerequisite before cutting jobs.

In January, Sibanye lowered its 2018 gold output forecast to about 1.1 million ounces, from a previous projection of 1.13 million ounces to 1.16 million ounces. The company’s gold mines, some of the world’s deepest, contribute about a quarter of Sibanye’s total revenue. The miner has diversified into platinum-group metals, acquiring assets in southern Africa and the U.S.

©2019 Bloomberg L.P.