Sibanye Gold Plans to Cut 305 Million Rand of Extra Costs
Sibanye Gold Ltd. (SGL), which mines all of its metal in South Africa, said it will trim 305 million rand ($31 million) of annual costs in addition to plans set out before its spinoff from Gold Fields Ltd. (GFI) in February.
The gold producer will make the savings from job cuts, reducing overtime and lowering power usage, the Westonaria-based company said in a presentation published on its website today. The savings are in addition to 499 million rand of cost reductions already in its 2013 plans, it said.
The company will tackle the “inappropriate organizational structures” and “low operational effectiveness” that it inherited from Gold Fields, Sibanye said in the presentation.
Sibanye was spun off from Gold Fields in February and comprises the Kloof-Driefontein complex, Africa’s largest gold operation, and the Beatrix mines. With its more mature mines, Sibanye will focus on increasing cash flow to pay dividends while Gold Fields is developing operations outside South Africa with longer life expectancies.
The company is attempting to reduce jobs amid rising trade-union tensions and a decline in the gold price. Labor organizations have demanded above-inflation wage gains before wage talks due to start next month, while gold has dropped 18 percent this year, reaching $1,373.32 an ounce by 1:12 p.m. in London.
Sibanye’s cost-saving plans follow an announcement last month that it will cut 1,110 jobs at its Beatrix West mine in an attempt to return the operation to profit.
Sibanye needs a “new operating philosophy and model” and has inherited a “bloated service function” from Gold Fields, it said.
Gold Fields spokesman Sven Lunsche declined to comment on the Sibanye presentation.
Sibanye Chief Financial Officer Charl Keyter and Corporate Affairs Director James Wellsted will give the presentation to investors at a Deutsche Bank AG conference in London today.
The stock has dropped 40 percent to 8.84 rand since it started trading on Feb. 12. Gold Fields has fallen 38 percent to 57.90 rand since then.
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