Cape Town – AngloGold Ashanti [JSE:ANG] expects to make a headline loss of between $80m (R1.06bn) and $98m (R1.3bn) for the half-year ended June 30 2017, partly as a result of the $47m (R625m) once-off non-cash provisions it set aside for the retrenchment of about 8 500 workers in South Africa.
The world’s third-largest gold producer, with about 28 000 employees in South Africa, said it would set aside “once-off non cash provisions arising from the potential retrenchment costs relating to the South African operations of $47m (post-tax) or 11 cents per share”.
As a result of its restructuring process, it recorded a post-tax impairment of certain assets totalling $86m (R1.14bn). “These impairments are non-cash in nature and are included in the calculation of basic earnings and earnings per share, but excluded from the calculation of headline earnings and headline earnings per share for the period,” it said in a statement on Tuesday.
Its announcement comes as the National Union of Mineworkers (NUM) Matlosana region on Tuesday marched against the miner’s decision to retrench workers at its two operations in Matlosana and Carletonville.
On Monday, the NUM bemoaned the fact that 80 000 jobs have been shed in the last five years, and said it would oppose all future retrenchments. The union is disappointed that the government has not done more to prevent the bleeding of jobs.
"We will fight tooth and nail with the necessary vigour against these mining companies," said NUM general secretary Kolekile Sipunzi.
But the Chamber of Mines hit back, saying that the mining companies are not NUM's enemy. It said it welcomed better cooperation to save jobs, but that the mining sector is becoming increasingly difficult to operate.
Between 2014 and 2016, the industry made an accumulative net loss of around R50bn, the chamber said. And between 2012 and 2016, the industry lost about 70 000 jobs as it struggled to remain viable.
"Increasing cost pressures such as the steep increase in the price of electricity, increased labour costs and the increased cost of materials have served to undermine the sector."
Under these circumstances, mining companies have been compelled to restructure to ensure their survival, the chamber said.
Settlement of silicosis class action
AngloGold also expects to pay $46m (R612m) of the settlement of silicosis class action claims and related expenditure, it said.
This is part of its working group initiative with other miners, who are hoping to achieve a solution “which is both fair to past, present and future employees, and sustainable for the sector, (and) is preferable to protracted litigation”.
“The working group will continue with its efforts – which have been ongoing for more than two years – to find common ground with all stakeholders, including government, labour and the claimants’ legal representatives.
“The ultimate outcome of these negotiations and the court sanction of the agreement remains uncertain and accordingly the provision is subject to adjustment in the future.”
AngloGold’s share price was down 2.37% at R130.07 by 14:10 on Tuesday. The miner has lost 56.8% of its share value since August 1 2016.Follow @lecordeur
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