Bernard Swanepoel, CEO, To The Point
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» Anglo Pt, Northam restart cost hit mines
» Harmony to lose 32,150 oz gold in mine closure
» Harmony shuts mine, Govt losing patience
» Havenstein quits amid safety review


Mine safety budget slashed by millions
Allan Seccombe
Posted: Tue, 30 Oct 2007

[miningmx.com] -- IN the year the Department of Minerals and Energy is cracking down on safety in the South African mining industry the ministry has had its budget for the promotion of mine health and safety cut by R3m.

In the Medium Term Budgetary Policy Statement, the National Treasury cut the budget for promotion of mine health and safety to R121.85m.

No officials from the DME could be reached for comment because they’re away on a strategy meeting until next week.

The bulk of the R3m was re-allocated to the DME’s electricity and nuclear programme and the remainder to administration.
vacancies and high staff turnover
“Savings due to the number of existing vacancies and high staff turnover have been shifted to goods and services in programme 1 (administration) (R500 000) and compensation of employees in programme 6 (electricity and nuclear) (R2.5 million),” National Treasury said.

The DME has begun temporarily shutting down shafts at which fatalities have occurred, something that will cost the mining sector dearly.

Anglo Platinum lost 9,000 oz of refined platinum worth some $13m after three shafts at its Rustenburg operations were temporarily closed.

Harmony Gold will lose 32,151 oz of production worth $25m at today’s prices after its Elandsrand mine was shut for some 48 days because of a shaft accident that left 3,200 workers trapped underground for up to 30 hours. The mine is due to re-open on 19 November.

Former Harmony CEO Bernard Swanepoel said there is a new emphasis on safety on mines, but it’s not the impression created if one reads the newspapers.

“It’s never been safer,” he said at a presentation in support of the NOAH AIDS orphans charity last week.

While he’s not wrong in saying that, the efforts by the mining industry to reduce fatalities by 20% each year from 2003 stalled in 2006 after a run of reductions that fell short of target.

Two hundred workers were killed on South African mines last year and there’s been a flurry of deaths just recently, which bodes ill for any substantial reduction this year.

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President Thabo Mbeki on the day of the Harmony incident on 3 October called for an audit of the country’s roughly 700 mines to make sure they comply with safety standards, a job that will stretch the mines inspectorate already limited resources.

“Capacity is a problem. There is a huge skills shortage in the country at the moment,” Thabo Gazi, the DME’s chief inspector of mines, said on the Moneyweb Power Hour, adding with the mining boom a lot of the inspectorate’s engineers had moved back into the private sector.

Meanwhile, the National Treasury pointed out fixed investment in the South African mining sector had picked up nicely after contracting in 2004 and 2005.

“Fixed investment in mining has started to respond to high commodity prices. In the first half of 2007, mining recorded an impressive 33% increase in real investment, compared with 14.8% for 2006 and a decline of 13.2% in 2005,” it said, without giving other data.

“Signs of a recovery are evident in the employment numbers, with a 7.4% increase in the number of mining jobs in June 2007 compared to the same period in 2006,” it said.

However, Finance Minister Trevor Manuel said production hadn’t shown the same stellar performance.

“Mining sector production has been disappointing considering the remarkable rise in commodity prices over the past few years,” he said in his mid-term budget speech.

Mining production increased by only 0.2% in the year to August 2007, weighed down by a 6% fall in gold output. Platinum group metals and coal output increased by 1.6% and 1.8% respectively.

GRAPH: Mining Production by Commodity 1990 – 2007.

Click on image to enlarge