SIBANYE Gold would mine surface ore stockpiles, shut down certain shafts, and operate other shafts on a partial basis if a strike called by the Association of Mineworkers & Construction Union (AMCU) was well supported from today.
“We will continue to generate some revenue and then manage our costs,” said James Wellsted, head of corporate affairs for the South African gold producer.
“We haven’t deliberately stockpiled surface resources because we didn’t know exactly if, or when, the strike would happen, but we have enough to keep us going for a little while, even with a complete shutdown,” he added.
Wellsted added that the company was also in “a very strong financial position” to deal with the effects of the strike with good lines of debt and cash on hand. This, and the operational preparations, are part of a robust plan set up by the company, the details of which Wellsted was not prepared to share ahead of the planned strike.
AMCU said it would take members on strike from the afternoon shift today. If fully supported it would affect about 40% of Sibanye Gold’s total workforce of about 45,000 at its Kloof and Driefontein operations, west of Johannesburg, as well as Beatrix which is in the Free State province.
Sibanye said it would produce 1.61 million ounces in its current 2016 financial year, a slight improvement on the 1.54 million oz in the previous financial year.
Sibanye has said in the past that the strike might not be well supported as workers had no appetite for it, but Wellsted acknowledged possible intimidation could be a factor forcing compliance. “We’ll only know after the second or third shift how well the strike is being honoured,” he said.
“Certain shafts could be shut down with only essential services being kept open. That would mean we’d close ventilation which saves us electricity which is a major cost for us.
“We would also decline to pay workers on strike,” he added. Based on a Labour Appeal Court ruling last month, Sibanye is entitled to extend its three-year wage deal signed with other unions, including the National Union of Mineworkers, to AMCU which is not in a majority at Sibanye’s mines.
AMCU contends that it is, in fact, the majority union and has criticised Sibanye management for failing to update it worker membership data.
“Sibanye has said that it will not amend wage increases and that it has ‘robust plans’ to manage the potential impact, but this is likely to be a headwind until the issue is resolved with the 2014 platinum strike a reminder that AMCU can be prepared for lengthy strikes to achieve objectives,” said Goldman Sachs in a report on April 5.
“Contagion to other operations is a potential concern and is another headwind for South African gold along with the recent strength in the ZAR going into debates around a potential impeachment of [President Jacob] Zuma,” it added. The efforts to impeach Zuma failed in Parliament yesterday.
Said Harmony Gold: “Harmony has signed a three year wage agreement with the majority of its unions and therefore we do not expect any strike at our mines”.
