Mining Weekly

JSE- and NYSE-listed Sibanye-Stillwater will consult with stakeholders about the possible restructuring of its gold operations and associated services, as a result of ongoing financial losses.

In a trading statement released on Thursday, the miner said it expects to report an attributable loss of R1-billion, or $77-million, for the year ended December 31, 2018, compared with the attributable loss of R4.4-billion, or $333-million, reported for the 2017 financial year.

The narrowed loss was offset by losses from the gold operations owing to safety incidents in the first half of the year and the ongoing strike by Association of Mineworkers and Construction Union (AMCU) members, as well as significant declines in deferred tax rate adjustments relative to 2017.

The operations worst affected by the strike, which started in November 2018, are Beatrix 1 and Driefontein shafts 2, 6, 7 and 8.

The company’s initiatives to contain losses at these operations have thus far remained unsuccessful, it said on Tuesday.

The proposed restructuring of the gold operations is aimed at mitigating retrenchments and seeking alternatives to the potential cessation or downscaling of operations at the affected shafts.

Subject to the outcome of the restructuring process, about 5 870 employees and 800 contractors could be directly impacted. Sibanye employs about 61 000 people.

“Contemplating potential restructuring of this nature is never taken lightly and we are aware of the possible impact on many of our colleagues. Our best attempts to address the ongoing losses at these operations, have, however, been unsuccessful and sustaining these losses may threaten the viability of our other operations.

“Previous engagement of this nature has proven successful, with Beatrix 4 shaft remaining operational and profitable, due to the successful outcome of two separate Section 189A processes in 2013 and 2017. We hope to engage constructively with our stakeholders to find ways to minimise and avoid job losses during this process, while ensuring that additional jobs are not placed at risk in future,” said CEO Neal Froneman.

Solidarity general secretary Gideon du Plessis noted that the Section 189 notice that could lead to 6 678 job losses did not come as a surprise. He said Solidarity and the National Union of Mineworkers had warned AMCU not to strike, because of the imminent catastrophic results on workers.

"The sad irony is that AMCU members will be hit hardest by the retrenchments, since it is mainly AMCU members working at the shafts operating at a loss and these members have already lost three months' salaries owing to the strike."

Du Plessis called on trade unions in the mining sector to sit side by side during retrenchment consultations to find alternatives and solutions to prevent retrenchments, or at least limit them.

Mineral Resources Minister Gwede Mantashe also took note of Sibanye's announcement and said the Department of Mineral Resources would engage with stakeholders in an effort to limit job losses during the restructuring.

EARNINGS EXPECTATION
Meanwhile, the company expects to report a basic loss a share of 44c, or $0.03, for the year, compared with the basic loss a share of 229c, or $0.17, in 2017.

Sibanye also expects to report headline earnings a share of 65c, or $0.05, compared with the headline loss a share of 12c, or $0.01c, for 2017.

These figures represent an 81% reduction in the basic loss a share and a 642% increase in respect of headline earnings a share.

Sibanye will release its full results on February 21.