Johannesburg - AngloGold Ashanti’s closure of two mines and potential retrenchment of 8 500 workers could be only the beginning of a new period of contraction in the 130-year-old industry.
Many shafts at other companies are losing money due to the current gold price, which has fallen precipitously since last year in rand terms.
Jobs in the industry have hovered at about the 120 000 mark since 2014, but in the decades before that, mine closures ensured an almost uninterrupted decline in production and employment, which was nearly 400 000 in 1994.
AngloGold CEO Srinivasan Venkatakrishnan said: “Basically, the volumes are down and the low ore grade compounds that. We’re mining further away from the infrastructure ... mining remnants. The rand price plays a part, but even at a higher price, we would be getting closer to closure.”
A meeting with Mineral Resources Minister Mosebenzi Zwane on Friday was “cordial”, said Venkatakrishnan.
“We gave the minister a heads-up before the announcement, as you do, and he appreciated that.
“We agreed to meet so he could be fully briefed. It was a very positive meeting.”
Zwane issued a statement on Friday saying he had instructed the Mineral and Petroleum Board to “verify the information provided by the company”.
“We continue to appeal to companies to act responsibly and with sensitivity. These are not just numbers to be thrown around, but people’s livelihoods and future job prospects, and we should not take this matter lightly,” Zwane said.
“It is incorrect to say section 54s contributed to this,” he said, referring to the department of mineral resources’ safety stoppages, which are often criticised by the industry for being heavy-handed.
Venkatakrishnan said: “It has nothing to do with the Mining Charter. It the charter had not been promulgated, we would have made the same announcement. It is fundamentally about the economics.”
The plan is to put the company’s Kopanang mine near Orkney and a large part of its Tautona mine in Carletonville on care and maintenance.
That is not the same as final closure and rehabilitation as the mine infrastructure is kept intact and the pumping of water from the shafts continues.
“The gold industry has challenges, but you also can’t put all mines in the same basket,” said Venkatakrishnan.
Kopanang, which opened in 1981, is 2.3km deep and has the lowest grade of ore among AngloGold’s South African mines. The mine’s rehabilitation liabilities – the money set aside for decommissioning it – is in the region of $13 million (R170 million).
Tautona in Carletonville is 70 years old and its rehabilitation fund was $15.5 billion last year.
These closure funds can only legally be used if you go through a formal mine closure process, which would involve getting a closure certificate from the department of mineral resources.
Despite the age of the industry, proper mine closures are relatively rare.
In AngloGold’s case, many of its mines nearing the end of their lives were sold off in the 1990s.
“In the past, we have sold on older mines to, say, African Rainbow Minerals,” said Venkatakrishnan, referring to the sale of aged mines to billionaire businessman Patrice Motsepe’s mining company in the late 1990s.
“We would be comfortable selling if there is a credible buyer that can close the mine and not leave it derelict. We are cognisant of what has happened at some other mines,” he said.
Venkatakrishnan was undoubtedly thinking of Blyvooruitzicht, an 80-year-old mine in Gauteng that went into provisional liquidation in 2013 and was, for all intents and purposes, abandoned.
Before that, there was the saga of Pamodzi Gold, a company built on old mines that had traded hands several times.
It also went into provisional liquidation and was pillaged for gold and scrap metal by a company tied to President Jacob Zuma’s nephew Khulubuse.
In both instances, workers were owed several months worth of salaries and essentially started squatting on the property, which zama-zamas soon overran.
The odds of the two AngloGold mines being revived are slim.
Stewart Bailey, an AngloGold spokesperson, said Kopanang required a gold price of about R800 000 and Tautona needed it to be about R700 000 for the mines to make money.
The gold price is now roughly R500 000.
“You can sustain losses for quite some time if you have a credible plan to turn it around,” he said.
AngloGold cannot afford to have either mine fall into disrepair. At both, it has viable resources and adjacent mines that would be damaged if Kopanang or Tautona were to flood because water pumping stopped.
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