JOHANNESBURG – When South African miners are allowed to recall all their workers as lockdown restrictions ease further on Monday, full production will remain elusive as the pandemic upends operating practices.
Social distancing, screening and testing will hamper the country’s deep-level mines, which have been operating with half their workforce since a five-week shutdown ended at the beginning of May. Virus flare-ups are temporarily closing individual gold, platinum and chrome operations. This new normal could curb output and erode profitability.
“We could see a reset in South African mine production capacity lower, even once government mandated employment capacity restrictions have been lifted,” RMB Morgan Stanley analysts, including Christopher Nicholson, said in a note.
With transport to the mines beginning as early as 4 a.m., it takes four to five hours to get tens of thousands of workers underground as screenings and other health protocols slow the start of the morning shift, said Johan Theron, a spokesman for Impala Platinum Holdings Ltd.
“Even in a perfect situation with all our workers safely back at work, given the precautionary measures under which we now operate, it is hard to see a return to full operational efficiency,” said Theron.
Implats, as the Johannesburg-based producer is known, has also suffered more severe disruptions. After workers tested positive for Covid-19 in mid-May, the company shuttered its Marula mine and quarantined employees. Now, it’s reopening the operation after a second and third round of confirmatory tests came back negative for most of the 19 staff.
Implats is not alone. AngloGold Ashanti shut its Mponeng mine after almost 200 workers tested positive for the virus, while Harmony Gold Mining scaled down work at its Kalgold operation after some employees were infected. Assore suspended operations at its Dwarsrivier chrome mine for more than two weeks this month after some workers tested positive.
Harmony CEO Peter Steenkamp said on Tuesday that, barring any further Covid-19 disruptions, it would take about a month to ramp up operations as the company brings back workers, some from neighboring countries.
The uncertainty surrounding the pandemic is clouding the financial outlook for producers.
“Many mining companies haven’t given updated guidance, which tells you just how difficult it is to quantify the impact,” Arnold Van Graan, an analyst at Nedbank. “It’s too early to make a call on the future of the industry, but the mining industry has shown in the past that it can adapt.”
For more on South African mining, click here
Given the current operational challenges, the industry’s future may hinge on a global solution being found to neutralize the virus, said James Wellsted, a spokesperson for Sibanye Stillwater.
“We may not even get to 100% capacity at the deep level mines until a vaccine is found or some sort of immunity takes place,” Wellsted said.