After facing numerous operational challenges at its South Deep operation, Gold Fields announced a restructuring plan to reduce activity and lower costs. The company said this may lead to a layoff of 1,100 permanent employees and 460 contractors.
The South African mine, which is the second-largest gold mine in the world, has consistently failed to meet mining and production targets and has lost 4 billion rand ($272 million) over the last five years, Gold Fields said.
Gold Fields purchased the mine in 2006 and has invested 32 billion rand in the operation. The biggest challenge, it said, has been transitioning the mine from “one run with a conventional mining mindset and practices to mining with a modern, bulk, mechanized mining approach.”
The company already tried restructuring and shift changes, but said it did not see much improvement.
“The proposed restructuring at South Deep aims to consolidate mining activity to increase focus and to match the cost structure to the current level of performance,” the company said.
Part of the restructuring includes servicing the eastern part of the mine from the Twin Shafts and re-staff the South Shaft operations to a single shift per day; reduce growth capital expenditure for the next 18 months to reduce the cash burn; and temporarily suspend mining activities at 87 Level and redeploy these mining crews into the 4W corridor.
The company said it was unable to provide guidance for 2019 and beyond until the proposed restructuring is completed.