Nick Holland, Gold Fields CEO

Gold bosses highlight power price concerns

| Mon, 02 Nov 2009 16:47 In an interview on SAfm @ 18:15 on 28 October 2009 [miningmx.com] -- IF the South African government goes ahead with a proposed 200% electricity price spread over three years it will be a disaster for the domestic gold mining industry, chief executives said.

"I certainly hope that we are going to have enough opportunity to debate this with government over the next three months because, if it continues this way and they implement this, it's going to be disastrous for the economy and the mining sector," Gold Fields CEO Nick Holland said on SAfm Market Update.

It holds a serious threat for the marginal shafts in Gold Fields, he said.

"If you look at a mine like Driefontein, it has seven or eight operating shafts, and some of the older, more marginal shafts on the western side of the property could possibly be affected by that. Some of the older shafts at Kloof could be affected," he said.

"We've got to finish our study and work out the overall impact. But the first blush does not look promising at all. So I'm very concerned," he said.

In terms of costs, it could add 17% to 20% to the group costs and ramp up costs at the South African operations by 30% at the end of that three-year period.

"That would have a very significant knock-on effect in terms of some of the more marginal shafts in our group, the more marginal shafts," he said.

"Then you've got to add on top of that the knock-on effects in terms of the impact on steel, cement, timber, you name it. So I'm very concerned about this," he said.

Harmony CEO Graham Briggs said the industry was lobbying the government through the chamber of mines and individual mines also had to lobby.

"The gold sector probably employs - I think the number is somewhere around 170 000, 180 000 people. The knock-on effect in most gold companies is probably one-to-ten, so you are talking of two million people here that are going to suffer from this process if they are out of work. It's a big number," he said.

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