AngloGold Ashanti Ltd. may cut about 8,500 jobs in South Africa and halt some unprofitable operations as the world’s third-largest gold producer pursues a turnaround in its home country.
AngloGold intends to place its Kopanang mine and the Savuka section of the TauTona mine on care and maintenance, the Johannesburg-based company said in a statement Wednesday. AngloGold is taking the steps “to ensure the viability of our remaining operations,” spokesman Stewart Bailey said by phone.
AngloGold’s South African mines made their first loss since 2012 in the first quarter of this year, as costs surged 44 per cent and output slid. The company said in May it was reviewing operations in the country, where it employs about 28,000 people, including contractors.
“Some of our older mines in the South African region have reached the end of their economic lives several decades after they started production,” AngloGold said. The mines face “systematic challenges” including declining output, increasing depth and cost escalations, it said.
“The restructuring of the company’s production and cost base is necessary to protect the overall viability of its South African business over the long term,” AngloGold said. The company has started a Labour Relations Act-mandated consultation process with employees about the planned restructuring, it said.
TauTona and Kopanang have “been a clear demonstration” of cost challenges, with so-called all-in sustaining costs in the first quarter at $1,737 and $2,399 an ounce respectively, following significant operating losses through 2016, according to the company. Its average gold price received in the quarter was $1,216 an ounce.
The company isn’t alone in struggling with rising costs. About 70,000 mining jobs have been lost in South Africa in the past five years, the Chamber of Mines said earlier Wednesday. The producers’ group is seeking to block South Africa’s new Mining Charter which it said could result in as many as 100,000 job cuts.
AngloGold slid 3 per cent to 134 rand a share at 3:47 p.m. in Johannesburg, extending this year’s decline to 12 per cent. – BLOOMBERG
