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Harmony shuts mine, Govt losing patience
David McKay
Posted: Thu, 04 Oct 2007
[miningmx.com] -- HARMONY Gold is to shut its Elandsrand mine, south-west of Johannesburg, for between three to six weeks, said Lizelle du Toit, spokesman for the South African gold producer.
This is to fix its shaft and complete a safety audit, said Du Toit in an interview. "It'll probably be done in three weeks," she said.
Harmony Gold said on October 3 that about 3,200 miners at its Elandsrand mine had been trapped underground after an accident disabled the lift.
Some of the workers, who have been underground from before the accident happened at 10am Wednesday, have not yet been rescued. "The focus is getting all miners to the surface and then we'll assess the damage," Du Toit said.
South Africa's minerals and energy department (DME) confirmed the closure of Elandsrand had been agreed, adding that Harmony had been cooperative.
"I was quite impressed. They
suggested the closure," said Bontle Mafuna, spokesperson for the department.
However, Mafuna said South Africa's mines minister, Buyelwa Sonjica, was growing increasingly weary of the mining industry's poor safety record. "We have the power to close mines in terms of Section 54 of the Health and Safety Act and we also have the power to prosecute," Mafuna said.
"We will consider those actions if this record continues. We will also consider making amendments to the act if we have to," she said.
Sandile Nogxina, director-general of the DME, said Sonjica had just returned from examining Mponeng, a mine located near Elandsrand and owned by AngloGold Ashanti, which recently reported four underground fatalities. "She's becoming very tired of what's happening," he said.
Until the accident at Elandsrand, which made international news, accidents involving the deaths this year of 12 people at Anglo Platinum's Rustenburg section, north of Pretoria, dominated the
mine safety agenda in South Africa.
Analysts estimate that the accident at Elandsrand will have a significant economic effect on Harmony Gold currently under the management of acting CEO, Graham Briggs. Briggs, who has asked shareholders to give him until the year-end to turn the company's fortunes around, took over from former CEO, Bernard Swanepoel, in August.
Briggs said it was too early to assess the damage. "We're just not sure yet of the damage to the main shaft; that's where it is.
"Will have obviously have to repair that." He confirmed Harmony had insurance but was unsure of what could be claimed at this point.
"The damage to the Elandsrand shaft comes at a particularly bad time for the group and will dent the December financial result severely in our view," said Shepherd, a gold analyst for JP Morgan in Johannesburg.
Elandsrand contributed about 9% of total gold production at Harmony Gold in the second half of its 2006 financial year,
and R68m or 7% of the group operating profit of R907m in the same period.
"Were the shaft to remain closed for the full quarter the group we estimate could lose R40m in operating profit and headline earnings per share would be some 10 center per share lower," said Shepherd.
Commenting on the rescue process, Briggs said about 2,300 miners had been returned to surface "at the last count". He said there was "still a few hours to go" before all miners were rescued.
"Three of the rescued miners went out on stretchers of which two recovered quite quickly. The third miner is slightly more dehydrated and is under observation," Briggs said.
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