Sibanye says in talks about possible S.Africa job cuts

by Reuters 0

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This is in an attempt to boost profits and productivity.

Sibanye said it had entered “into section 189 consultations on the future of the Cooke 4 mine” – a reference to a legal requirement that companies must talk with organised labour and other affected parties in advance about potential layoffs.

Reuters reported on Thursday that Sibanye planned to cut up to 2,500 workers at Cooke 4, an operation near Johannesburg which the company recently acquired.

The company, which only mines in South Africa, has a workforce of around 39,000 in total, plus 5,000 contractors.

(WATCH VIDEO: A deeper look at Sibanye Gold)

Sibanye spokesman James Wellsted said it was premature to talk about precisely how many jobs might be on the line.

“We do not know how many people will be laid off, the 2,500 number is roughly the number of employees at Cooke 4,” Wellsted told Reuters.

“The idea is to enter discussions with unions and all employees to try and avoid any retrenchments if possible.”

[DATA SGL:Sibanye] said it needed to find “sustainable solutions to ensure delivery of the required productivity and profitability levels at the Cooke 4 mine”.

Wellsted said Cooke 4 had been impacted by government-ordered safety stoppages and its productivity had suffered.

He said a similar process last year at its Beatrix West mine, where an underground fire hit output and revenue, led to under 100 job losses as employees were redeployed to other parts of the company and the operation was restored to profitability.

SBG Securities mining analyst David Davis said Sibanye had acquired the Cooke assets, which include underground and surface operations, primarily for the above-ground re-mining of waste dumps which has become profitable.

“The underground mines are marginal at current gold prices and Cooke 4 is extremely marginal,” Davis told Reuters.


Job cuts are a thorny issue in South Africa where labour relations in the mining shafts are raw, the unemployment rate is around 25 per cent and income disparities rooted in the apartheid era remain glaring.

Sibanye is a spin off from Gold Fields, which last year folded most of its labour-intensive South African operations into the separate company so it could focus on mechanised mining at a global level.

Sibanye is regarded as a dividend play as it is mining mature assets which generate cash and, with a few exceptions, are not expected to require large amounts of capital expenditure.

Its dividend yield is currently a hefty 5.11 per cent, well above the 2.77 per cent average for Johannesburg’s All-share index.

But its policy of giving cash back to shareholders will sharpen labour resistance to any layoffs as South Africa’s restive unions take a dim view of job losses when a company is making a profit and good dividends overall.

(READ MORE: Sibanye Gold operating profit up 4%)

The National Union of Mineworkers (NUM), the biggest union at Sibanye, could not immediately be reached for comment.

Sibanye has been a star performer with a share price that has almost doubled since it debuted in February of 2013. On Friday morning, it was trading 1.5 per cent higher at 24.82 rand.