Safety knocks Gold Fields back R2.29bn
January 30, 2009
By Justin Brown
Johannesburg - Gold Fields had lost revenue of more than R2.29 billion over the past 18 months as a result of safety stoppages and measures to improve its safety record, mainly in South Africa, chief executive Nick Holland said yesterday.
In the one and a half years to last month, Gold Fields generated revenue of R35.8 billion.
Holland estimated that the group had lost R2 billion in revenue as a result of safety stoppages in the year to June - when a record 47 people died at Gold Fields' mines - and R290 million in the six months to December, when eight people died. In the half-year to December, AngloGold Ashanti had nine mine deaths, while 11 people died at Harmony Gold's mines.
Holland was unable to give a time frame for when Gold Fields was seeking to eliminate mine deaths. Asked how much the group had invested at its local mines since May to improve its safety record, he said: "We don't see a difference between a safety cost and a production cost. The key way we mine is safely. I can't give a figure for what the increased investment has been on safety. It really is an opportunity cost - and, of course, the loss of life."
Holland said that at Gold Fields' international operations, any injury prompted close attention and an investigation. "The South Africa operations want to get to that level so that even an injury is a major concern - never mind a fatality."
Gold Fields used 225 tons of steel to fix a main shaft at its Kloof mine on Johannesburg's West Rand, where the steel had been "heavily corroded over 40 years", Holland said.
The group has cleared a critical secondary support backlog at its Driefontein mine and rehabilitated key parts of the South Deep mine. "All rehabilitation projects have been completed," Holland said. "South Africa is going to increase production from 15.5 tons to 18 tons of gold a quarter."
Despite all Gold Fields' safety actions, Holland listed "safety stoppages at South African mines" as one of four key risks faced by the group.
Gold Fields said yesterday that net profit for the half-year to December declined 76 percent from a year earlier to almost R589 million. Net profit for the December quarter rose more than sevenfold to nearly R519 million.
An analyst, who wished to remain anonymous, said Gold Fields' result was "generally positive", with the weakening rand helping to "boost profit a lot. Gold Fields looks set to produce better results in the March and June quarters."
The group's shares rose 9.64 percent to R104.98 yesterday, while the gold mining sector rose 5.09 percent.
"Gold Fields' shares are up as investors like the result, especially the increase in earnings," said an analyst. "The gold price is also looking good."
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