Sibanye Gold Ltd., the South African mining company spun off from Gold Fields Ltd. (GFI), said it won’t tolerate illegal walkouts as it prepares to review operations at its main assets in order to reassure investors.
“They are quite clearly concerned about South Africa,” Chief Executive Officer Neal Froneman said in a telephone interview, referring to investors. The former CEO of Gold One International Ltd. (GDO) returned to South Africa after meeting with Gold Fields shareholders in London and the U.S. in preparation for Sibanye’s Feb. 11 listing in Johannesburg and New York.
Strikes over pay that started at South African platinum mines and spread to gold, iron-ore and coal producers cut mining output by 10.1 billion rand ($1.1 billion) in 2012, costing tax revenue, exports and jobs, according to the National Treasury. Industrial unrest and above-inflation pay gains were partly behind the decision by Gold Fields to spin off its local assets.
“Anything that is improper, illegal union activity we will not tolerate,” Froneman said in a Feb. 1 phone interview from Cape Town, where mining executives, analysts and bankers are gathering for the annual Mining Indaba conference. “As these are some of the best gold mine assets in South Africa, it would be hard to imagine why we would not get political and union support to make this work.”
Sibanye Gold will include the Kloof-Driefontein Complex, Africa’s largest gold operation, and the Beatrix mines. Gold Fields will keep South Deep, its second-biggest facility, and mines in Peru, Ghana and Australia.
About 29,000 Gold Fields workers walked out during the strikes last year, winning pay gains that added to rising power costs and capital spending.
Sibanye will be more focused on the KDC and Beatrix mines than Gold Fields was capable of being when it ran the operations, according to Froneman. “The assets are mature but that doesn’t mean that they’ve been undercapitalized,” he said.
The new company will spend the first six months reviewing work that’s been done by Gold Fields on the mines. That will be followed by 18 months to implement plans to improve their efficiency, the CEO said. “Our main priority is to allocate cash to dividends.”
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