AngloGold Stops Pumping Water at South Africa Mine on Nonpayment

AngloGold Ashanti Ltd. stopped pumping water from a shaft neighboring one of its mines in South Africa because the operators failed to pay for the work, the world’s third-largest producer of the metal said.

AngloGold last year bought two shafts from the Blyvooruitzicht mine southwest of Johannesburg to pump out water that was affecting its nearby Savuka mine, the company said today in an e-mail. It agreed to pump water from a third shaft provided it would be reimbursed by Goldrich Holdings, which is operating Blyvooruitzicht.

“When no payment was made, despite a number of requests which were ignored over several months, AngloGold Ashanti ceased pumping at Blyvoor 5 shaft while continuing to pump as originally planned at Blyvoor 4 shaft and Blyvoor 6 shaft,” the company said.

Blyvooruitzicht, which started production in 1942, closed in July, throwing 1,700 miners out of work, after the gold price dropped 28 percent last year, making it unprofitable to mine the remainder of its dwindling reserves. Its last operator, Village Main Reef Ltd. (VIL), isn’t responsible for environmental rehabilitation because it never took legal ownership of the operation, Chief Executive Officer Ferdi Dippenaar said last month. It was previously owned by DRDGold Ltd.

The situation at Blyvooruitzicht is deteriorating, the National Union of Mineworkers said today in a statement. Employees aren’t being paid, shafts are flooding and violence between groups of illegal miners and local residents is increasing, the NUM said.

Not Liable

AngloGold and the liquidators didn’t disclose the payments needed for pumping the water to Goldrich before it took control on Feb. 7, Bonginkosi Mthethwa, a spokesman for the company, said by phone. The company isn’t liable for payments before that date, he said.

Workers have been paid since Feb. 7, Mthethwa said.

Goldrich is operating under a business rescue order, which protects it from creditors, said Leigh Roering, a spokesman for Harvard CRS, which is liquidating the mine. Harvard CRS is attempting to terminate an agreement that allows Goldrich to run the operations, Roering said by phone today.

A court hearing on the subject will be held tomorrow, Roering said. Mahier Tayob, a spokesman for Tayfin Forensic Auditors, which is working for Goldrich, confirmed tomorrow’s court hearing when called.

To contact the reporter on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Ana Monteiro, Alex Devine

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