VMR stays retrenchments until after COVID-19 lockdown after meeting with mines minister

Kopanang mine

VILLAGE Main Reef (VMR) has postponed retrenchments at its Tau Lekoa and Kopanang mines in South Africa until after the COVID-19 lockdown, said Reuters.

This follows a meeting with the country’s mines and energy minister, Gwede Mantashe, in April. According to the National Union of Mineworkers (NUM) up to 6,309 workers could lose their jobs at the mines as well as the firm’s West Gold Plant, said the newswire.

“We were just starting to see positive signs of improvement in March, when unfortunately, the turnaround strategy was abruptly interrupted by the outbreak of COVID-19 in South Africa and the subsequent Lockdown (and its extension),” VMR’s CEO, Jeff Dong, said.

Job cuts are a politically sensitive issue in South Africa, where unemployment stands at around 29%. The mining sector employs around 450,000 people, said Reuters citing 2019 data from the Minerals Council South Africa.

South Africa imposed a strict 21-day lockdown on March 27, which was extended until May, to stop the spread of the new coronavirus, forcing most mines to temporarily shut down. However, mindful of the economic damage caused by the shutdown of the sector, the government on April 16 said it would allow mines to start up again at up to 50% capacity.

VMR is controlled by Chinese group Heaven Sent which bought the company in 2015.  These operations have been making heavy losses in recent years despite record rand gold prices.

Commenting in a Section 189 notice issued to employees, VMR stated that: “Prior to the lockdown, the Kopanang and Tau Lekoa mines have been making significant losses during the past years. The Tau Lekoa mine made an accumulated cash loss of R1.28bn from 2015 to 2019 and a further cash loss of R107m for the first three months of 2020.

“The Kopanang mine made an accumulated cash loss of R305m from March 2018 to December 2020 and a further cash loss of R37m for the first three months of 2020. These losses, without restructuring of the workforces supporting these mining operations, are unsustainable”.