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AngloGold, DRDGOLD in pumping dispute
David McKay
Posted: Wed, 30 Mar 2005
[miningmx.com] -- ANGLOGOLD Ashanti acknowledged today that the provisional liquidation of shafts owned by DRDGOLD raised the risk its Vaal Reefs mines, which accounted for 54% of South African gold production in the December quarter, could be flooded.
The risk was that underground water pumping services were stopped at the DRDGOLD shafts, situated in South Africa’s North West province. “It does present something of a problem because the DRDGOLD mines are updip of ours,” said Steve Lenahan, AngloGold Ashanti spokesman.
According to Mineweb, which first reported the matter yesterday (29 March), AngloGold Ashanti owns three mines – Great Noligwa, Kopanang and Tau Lekoa - that could be flooded unless the long-term responsibility for funding water pumping was assumed by it, DRDGOLD or a third party.
AngloGold Ashanti’s existing pumping facilities were insufficient to take on
the additional load of water from DRDGOLD’s shafts, estimated at 30 megalitres (30 million litres) per day. Moreover, installing upgraded pumping facilities could take 12 months, Mineweb said in its report. Great Noligwa, Kopanang and Tau Lekoa accounted for about 54% of AngloGold Ashanti’s South African gold production of 734,000 oz in the December quarter.
DRDGOLD’s shafts in the North West province, owned by subsidiary, Buffelsfontein Gold Mining Company, pumps an estimated 20 megalitres of underground water a day. A further 10 megalitres is pumped by Stilfontein Gold Mining Company, a firm managed by Roger Kebble who charges DRDGOLD for the service.
The liquidation of the mines raises the prospect that the cost of pumping, estimated by DRDGOLD at R85m/year, would have to be carried by AngloGold Ashanti.
AngloGold Ashanti would consider all options to protect its rights, said Lenahan. “DRDGOLD is bound to comply with laws and government is bound to
make sure companies comply with the laws,” Lenahan said.
“They have to continue pumping and we will protect our interests,” he said.
Ilja Graulich, spokesman for DRDGOLD, told miningmx that responsibility for pumping the underground water lay with the consortium of liquidators appointed to “maximise value” from the North West shafts.
Interestingly, this opens the way for a legal dispute between the two companies.
AngloGold Ashanti believed certain aspects of the Minerals Act should be enforced to oblige DRDGOLD to attend to pumping in terms of its rehabilitation duties. DRDGOLD believes that the Companies Act should take precedence providing it with the right to liquidate assets and dispose with contingent responsibilities.
Lenahan said the matter was being dealt with “with the utmost urgency”. It is thought that halting pumping for longer than a day would leave the Stilfontein works under water, knocking out roughly a third of the
area’s total pumping capacity.
A meeting between AngloGold Ashanti, DRDGOLD, and officials in government’s mines environmental management division was convened yesterday. A government official confirmed the meeting but declined to give details. “We will have to talk with the liquidators first,” he said.
DRDGOLD said earlier this week that liabilities attached to the North West province shafts were fully funded, including “one of the best financed” rehabilitation funds in the industry. This might imply that intermediate funding of the pumping cost could be carried by the liquidator.
DRDGOLD wanted to negotiate a water pumping share agreement with AngloGold Ashanti about 12 months ago, Graulich said. “We engaged AngloGold a year ago but we had no constructive feedback,” he said.
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