Gold Fields Claims Deep South Retrenchments Were a Last Resort

Gold Fields (NYSE:GFI,JSE:GFI) has retorted to claims from Mineral Resources Minister Gwede Mantashe that recent restructuring at Deep South was not done in good faith, with the miner stating that the decision was without malice and simply a last resort.

The minister’s statement followed a meeting on Monday (November 26) between Mantashe, Department of Mineral Resource officials, national leaders of the National Union of Mineworkers (NUM) and senior Gold Fields leaders, which included CEO Nick Holland.

“The company understands, and is sensitive to, the impact on families and communities of job losses due to the restructuring. That is why the retrenchments currently being carried out were the last resort following many interventions over a long period of time,” Gold Fields stated in a press release.

Despite Gold Fields’ attempts to explain the situation, the minister stated, “[w]e don’t believe the company is acting in good faith. They have merely engaged in a tick box exercise for compliance purposes.”

Adding, “[t]his is a disturbing approach, and we remain unhappy with the way the process has unfolded thus far.”

Gold Fields current restructuring plan includes the retrenchment of 1,082 employees and 420 contractors at the South Deep mine.

The miner notes that this is the number of employees who will lose their jobs is actually far lower than what it could have been had the company not been able to procure additional cost savings of about R500-million as well as other initiatives set in place by the South Deep management team in recent months.

Gold Fields commented on the alternative cost-saving initiatives, stating, “[t]hese included a 25 percent reduction in the size of the management team on the mine and a series of voluntary severance packages over the past year that were accepted by about 460 employees in total, including 180 of those affected by the current retrenchments.”

The miner also noted that South Deep, which represents a R32-billion investment in South Africa by the company, had been losing more than R100-million a month prior to the restructuring process.

“The current restructuring is a necessary basis for securing the future of the mine and the remaining 3,500 jobs,” Gold Fields said.

Meanwhile, the company reported that it spoke with the NUM to discuss a proposed settlement agreement in the hopes of resolving the strike at Deep South that began earlier this month as employees reacted to the retrenchments.

Addressing the strike, Gold Fields said, “[t]his included an increase in the severance payments to retrenched employees by an extra 4 weeks’ pay in addition to the retrenchments package they have already received.

“Retrenched employees will also be able to access funding in excess of R10-million set aside for portable skills training and would be considered for preferential re-employment should positions become available over the next 12 months at senior levels and 24 months at junior levels.”

The union has until the end of this week to accept the proposed settlement.

To date, the strike has resulted in a loss of approximately R6-million a day, which Gold Fields warns could further undermine the operation’s viability.

As of 11:55 a.m. EST on Tuesday (November 27), Gold Fields was down 3.14 percent, trading at US$2.93.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.