Harmony Gold considers job cuts

2014-11-05 12:07

Harmony Gold reported a further quarterly loss today and suggested it might have to cut jobs as it contends with a depressed gold price and operational problems which include an escalating battle with illegal miners.

Unveiling its results for the three months to end-September, the company said losses narrowed by 78% to R226 million, as production rose by 6% to just over 303 000 ounces.

But the current quarter will be a tough one as the company last week said it was closing its key Kusasalethu mine for two weeks to try to remove illegal miners who are believed to be starting fires in the mine.

“The decision comes after a third underground fire in October was started by illegal miners. Although no one was harmed in any of these fires, it did result in 10 production days lost in October,” Harmony said in its results statement.

The company is especially sensitive about safety after nine employees died in a fire in Feburuary at its Doornkop mine.

Harmony has also struggled to get Kusasalethu back to full production after shutting the mine for several weeks at the start of 2013 because of labour violence rooted in union rivalry.

“Kusasalethu’s production has continued to be problematic and management is working on an alternative plan to return the mine to profitability,” the company said.

Chief Executive Graham Briggs implied that any restructuring at the mine was likely to include job cuts.

“The plans at Kusasalethu we will be signing off in the next few weeks ... We will have to go through a negotiating process with unions,” he said on a conference call.

Under South African labour law companies have to hold talks with unions if they plan lay-offs.

“If we look at job cuts, 50% of our costs are on labour, so any major restructuring always involves jobs and we have to look carefully at that,” Briggs said.

He said Kusasalethu had not made a profit since 2012 and the company had been “throwing a lot of resources at it to try and improve the situation there”.

The company said it currently employs 6 441 people at Kusasalethu, including contractors.

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