Sibanye signals 3,000 lay-offs at Kloof as operational woes trump sky-high gold prices
Sibanye-Stillwater said on Thursday it was holding mandatory consultations that could see almost 3,000 workers laid off at its Kloof 4 shaft near Westonaria, western Johannesburg. The shaft has been closed since 30 July after a major operational mishap.
Gold prices at over $1,900 an ounce are sky high by historical standards, but that does not make all shafts profitable.
Sibanye said on Thursday that it will enter Section 189 consultations – the part of the Labour Act concerning potential lay-offs – “with organised labour and other affected stakeholders regarding the possible restructuring of its SA gold operations pursuant to ongoing losses over an extended period and operational constraints at the Kloof 4 shaft”.
The possible restructuring could affect 2,389 employees and 581 contractors, translating into almost 3,000 job losses in an economy that already tops the global rankings for unemployment. But the shaft is making a loss and Sibanye does not subsidise such assets with those that are making money.
“The initiation of S189 consultations follows numerous unsuccessful attempts to address productivity issues and other operational constraints at the Kloof 4 shaft, including seismicity and cooling constraints (associated with the chilled water reticulation circuit), which together have contributed to sustained losses, even at recent high gold prices,” Sibanye said.
“This has been compounded by the recent incident at Kloof 4 shaft which caused significant damage to the shaft infrastructure. Together, these factors have resulted in a severe deterioration in productivity and have jeopardised … financial viability.”
The incident – in which no one was hurt – occurred on 30 July during a standard safety trial run of the conveyance system which took place before hoisting employees up the shaft.
“The ascending counterweight to the conveyance encountered an unknown obstruction in the shaft, resulting in a number of ballast plates falling down the shaft,” Sibanye said at the time.
Sibanye spokesperson James Wellsted told Daily Maverick that the ballast plates used to counterbalance the hoisting cage weighed 250kg each and that about 50 of them had taken the plunge – so, about 12.5 tonnes, heavier than an African elephant.
The shaft has also experienced a growing number of seismic events, and while safety mishaps have declined, this trend makes it more difficult to access certain areas including high-grade ones.
Proposed Section 189 lay-offs are not always set in stone.
Sibanye has previously cut fewer workers than initially flagged, such as at its Beatrix operation in Free State and its Kloof 1 plant. Launched late last year with over 2,300 jobs on the line, in March this year they concluded with 168 lay-offs after the rest of the affected workforce accepted transfers to other operations or voluntary separation/early retirement packages.
“A shock that it follows so soon after Sibanye’s recent positive interim results for their gold sector. Affected workers face a black Christmas with the uncertainty of whether they will have a job in 2024,” Gideon du Plessis, general secretary of the Solidarity trade union, told Daily Maverick.
“But the 2022 Beatrix 189 process showed that if we are creative and all parties work together, the number of affected workers can be reduced significantly.”
The area around Kloof 4 is also a hive of illegal mining activity and has seen an acceleration of armed attacks against Sibanye security personnel, underscoring the potential social risks of job losses there in the current environment.
Read more in Daily Maverick: Attacks on security personnel at SA mines increase while underground safety improves
Retrenchments at the shaft may not automatically add to the number of Zamas operating in the area, but the decline in mining employment and the migrant labour system have for decades been swelling their ranks.
This could also be a canary in the coal mine for workers across the wider mining sector. Data on Thursday showed that South African mining production fell 3.6% year on year, a long-term decline that, while not as stark as ballast plates hurtling down a shaft, has yet to reach the bottom.
With commodity prices generally cooling, notably for platinum group metals, and the industry’s earnings falling in tandem, there must be shafts outside of gold – which is still fetching healthy prices – also feeling the squeeze, even those operated by companies that are still making money.
Transnet and Eskom’s woes are also having a material impact on sales and production, factors that have the full attention of nervous boardrooms.
The bottom line is that more Section 189 talks may be on the horizon in the mining industry.
Labour unrest in the sector has also cooled in recent years, but with enough sparks, it could flare up again. DM