Pan African goes to war

Brendan Ryan | Wed, 10 Feb 2010 13:25

[miningmx.com] -- PAN African Resources (Pan African) shut down its Barberton gold mines for two weeks in December, after the situation with criminal miners on its operations turned into an all-out war.

Pan African CEO Jan Nelson said on Wednesday the company was forced to act after criminal miners took employees hostage on two occasions. This occurred as they shifted their activities from worked-out sections of the mine into current mining areas.

Special armed private security company task teams, accompanied by representatives of the South African Police Service, then spent the two weeks sweeping the three operating mines at Barberton.

A total of 550 criminal miners were arrested and a series of shootouts took place underground, although only three of the miners were injured.

Nelson said: “This turned into a war. These guys got far more aggressive underground when encountered by our employees. They were armed with AK-47s and hand grenades -they held their ground and did not run away as they used to do previously.”

Nelson estimated there were still about 55 criminal miners underground, but said the situation was now under control and outlined stringent measures Pan African was taking to keep it that way.

These included the kind of high-tech surveillance equipment in use on the battlefronts of Iraq and Afghanistan.

Two helicopters are being used to constantly sweep mine properties, pinpointing insurgent criminal miners trying to get into the underground workings through various access points.

The Barberton mines have been in operation for more than a century. The mine properties extend over a mountainous region, with numerous old shaft entrances from which miners can get into the current workings.

The mine workings are also situated close to the Swaziland and Mozambique borders. Nelson said many of the illegal miners were coming in from those countries, as well as from Zimbabwe.

Nelson said the helicopters also operated at night, using high-tech thermal imaging equipment. Task teams were then deployed from the helicopters to arrest any parties of criminal miners that were detected.

He added plans were being looked at to replace the helicopters with remote-controlled drone aircraft equipped with cameras and thermal-imaging sensors.

Nelson said: “We have taken on a completely new systematic approach to dealing with this situation, which is the biggest threat to the success of our mining business.

“Security has become a core function almost as important as mining. We have appointed a manager to focus solely on security, whereas previously it was part of the mine general manager’s responsibility.

“We are getting a lot of support from the police and from government. (Minister of Mineral Resources) Susan Shabangu visited the mine and brought with her the minister of intelligence.

“We now have South African Defence Force units patrolling the border regions, while a full-scale intelligence exercise has been mounted to track down the ringleaders behind the criminal miners. The Asset Forfeiture Unit is also involved.

Nelson said: “Our employees are now telling us the mine is clean, and conditions are back to where they were five or so years ago.

“The probability of us having to shut down the mine again is extremely low, but I cannot rule it out completely. “

Closing the mine for two weeks cost Pan African 4,000 ounces in lost gold production, worth about $4.4m (about R32m). The mine’s security costs jumped to R9.2m for the six months to end-December, from R5.5m in the previous comparable period.

Nelson said the company was looking for ways to hold down the security costs - such as substitution of drone aircraft for the helicopters.

He said: “We don’t want to keep spending on security at these levels but, even so, the benefits are outweighing the costs involved.”

The writer owns shares in Pan African.