[miningmx.com] – SIBANYE Gold is waiting on the outcome of discussions with the Competition Commission before restructuring operations at Cooke 4, the West Rand gold shaft where up to 2,500 jobs are at risk.
“The Competition Commission issued a notice to us yesterday [November 12] that a restructuring at the shaft was in contravention of our takeover [of the Cooke shafts],” said James Wellsted, head of corporate affairs at Sibanye Gold.
The commission is questioning Sibanye Gold’s decision to reduce the workforce at the shaft as the gold producer undertook not to do so for a period of two years following completion of the takeover which was conducted by means of a merger of assets.
Sibanye announced its decision to buy Cooke 1-4 shafts in August 2013, but the deal was only consummated in March.
In February, it emerged that the commission had become aware of possible retrenchments at Sibanye Gold during its competition and public interest assessment of the transaction.
Sibanye agreed not to conduct retrenchments as a result of the merger, but added at the time that it thought the commission’s demand for a two-year freeze on merger related retrenchments was unwarranted, according to an article in BDLive.
The Cooke 1-3 shafts have estimated gold reserves of 2.8 million ounces and resources of 22.65 million ounces – enough to sustain operations for 13 years whereas Cooke 4 is the site of the Ezulwini uranium processing facilities.
The assets also include surface operations which are building up to 400,000 tonnes a month of tailings and that could be combined with Sibanye Gold’s West Rand Tailings Re-treatment Project.
“We contend that the layoffs are a financial decision and do not relate to the takeover of the Cooke assets,” said Wellsted, who added that Cooke 4 was not performing as well as Sibanye had planned. “We have to wait for a legal opinion on this,” he said.
Sibanye Gold informed the Competition Commission in August that it intended to undertake restructuring at Cooke 4, giving it a 60-day notice.
Wellsted said that negotiations with the National Union of Mineworkers (NUM) had been largely concluded following the issue of a Section 189 notice. Discussions had been held with the union regarding retrenchment avoidance options, he said.
There would be layoffs, and even some forced retrenchments, said Wellsted. “We hope to achieve what we achieved at Beatrix West section in April 2013 where there was a restructuring and we brought the shaft back to profitability while saving jobs, he said.
A good performance from the Cooke assets was crucial to Sibanye achieving its full-year gold production target of some 1.61 million ounces which would require it to achieve a 13% improvement over its record September quarter performance.
Sibanye Gold reported All-in Sustaining Costs some 15% higher in the September quarter at about R384,777/kg or some $1,116/oz. The rand gold price is currently trading at about R417,350/kg while the dollar price of gold is $1,158/oz.
