Aug. 2 (Bloomberg) -- Gold Fields Ltd., Africa’s second-biggest producer of the metal, issued a notice of possible dismissals to most underground workers at the South Deep mine in South Africa.
The Johannesburg-based company wants to implement a new operating model to improve productivity at South Deep, including changing shift arrangements, it said in a statement today. South Deep, which made up 7.8 percent of the company’s 2011 attributable output, had the highest total cash costs of all Gold Fields’ operations last year at $1,073 an ounce. The new model would enable it to create a further 400 full-time positions immediately and as many as 1,500 by the end of 2015, the company said.
Gold Fields and the National Union of Mineworkers couldn’t reach an agreement on the proposal, with the company issuing a section 189 notice in terms of the Labor Relations Act warning of possible dismissals. Negotiations with unions had lasted “several months,” Gold Fields said.
The “worst-case scenario” would see it dismiss 2,384 underground workers, Chief Executive Officer Nick Holland said on a conference call.
The company has as many as 60 days of mediated talks with union representatives before it can begin a retrenchment process, according to labor law.
South Deep, located 45 kilometers (28 miles) southwest of Johannesburg, produced 273,000 ounces of gold last year and employed about 3,500 workers. The mine is on track to produce at a rate of 700,000 ounces a year by the end of 2015, making it Gold Fields’ second-biggest South African mine after the nearby Kloof-Driefontein complex.
“If they want a strike we will give one to them,” Lesiba Seshoka, the union’s spokesman, said by phone from Johannesburg. “That’s not what we want now.”
Workers embarked on a nine-day strike at South Deep in November 2010 to demand more black managers at the company.
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