20°C / 22°C
  • Sun
  • 19°C
  • 12°C
  • Mon
  • 18°C
  • 13°C
  • Tue
  • 18°C
  • 13°C
  • Wed
  • 23°C
  • 13°C
  • Thu
  • 24°C
  • 13°C
  • Fri
  • 24°C
  • 12°C
  • Sun
  • 24°C
  • 16°C
  • Mon
  • 27°C
  • 16°C
  • Tue
  • 26°C
  • 15°C
  • Wed
  • 23°C
  • 15°C
  • Thu
  • 26°C
  • 17°C
  • Fri
  • 28°C
  • 17°C
  • Sun
  • 22°C
  • 14°C
  • Mon
  • 19°C
  • 15°C
  • Tue
  • 20°C
  • 14°C
  • Wed
  • 24°C
  • 15°C
  • Thu
  • 27°C
  • 13°C
  • Fri
  • 25°C
  • 14°C
  • Sun
  • 22°C
  • 12°C
  • Mon
  • 21°C
  • 14°C
  • Tue
  • 19°C
  • 14°C
  • Wed
  • 24°C
  • 13°C
  • Thu
  • 26°C
  • 12°C
  • Fri
  • 25°C
  • 13°C
  • Sun
  • 23°C
  • 19°C
  • Mon
  • 22°C
  • 19°C
  • Tue
  • 22°C
  • 18°C
  • Wed
  • 26°C
  • 19°C
  • Thu
  • 22°C
  • 19°C
  • Fri
  • 23°C
  • 19°C
  • Sun
  • 20°C
  • 17°C
  • Mon
  • 20°C
  • 16°C
  • Tue
  • 21°C
  • 17°C
  • Wed
  • 22°C
  • 17°C
  • Thu
  • 22°C
  • 17°C
  • Fri
  • 23°C
  • 16°C
  • Sun
  • 30°C
  • 16°C
  • Mon
  • 31°C
  • 15°C
  • Tue
  • 30°C
  • 17°C
  • Wed
  • 27°C
  • 17°C
  • Thu
  • 32°C
  • 16°C
  • Fri
  • 32°C
  • 18°C
  • Sun
  • 24°C
  • 16°C
  • Mon
  • 26°C
  • 16°C
  • Tue
  • 26°C
  • 16°C
  • Wed
  • 22°C
  • 16°C
  • Thu
  • 26°C
  • 17°C
  • Fri
  • 26°C
  • 17°C
  • Sun
  • 24°C
  • 15°C
  • Mon
  • 22°C
  • 17°C
  • Tue
  • 23°C
  • 16°C
  • Wed
  • 25°C
  • 15°C
  • Thu
  • 29°C
  • 14°C
  • Fri
  • 27°C
  • 15°C
  • Sun
  • 28°C
  • 12°C
  • Mon
  • 27°C
  • 15°C
  • Tue
  • 20°C
  • 13°C
  • Wed
  • 23°C
  • 13°C
  • Thu
  • 26°C
  • 11°C
  • Fri
  • 26°C
  • 12°C
  • Sun
  • 21°C
  • 16°C
  • Mon
  • 19°C
  • 15°C
  • Tue
  • 18°C
  • 15°C
  • Wed
  • 27°C
  • 15°C
  • Thu
  • 25°C
  • 15°C
  • Fri
  • 24°C
  • 15°C
  • Sun
  • 19°C
  • 15°C
  • Mon
  • 21°C
  • 14°C
  • Tue
  • 23°C
  • 12°C
  • Wed
  • 23°C
  • 16°C
  • Thu
  • 23°C
  • 16°C
  • Fri
  • 25°C
  • 15°C

Gold Fields spinoff shows SA's gold sector decline

The deal leaves Gold Fields with just one mine in SA, the highly mechanised South Deep operation.

Gold Fields hopes its new operation divisions will help curb soaring costs and declining output.

JOHANNESBURG - Gold Fields the world's fourth-largest bullion producer, is spinning off its two oldest South African mines in the latest sign of the country's once mighty gold industry succumbing to declining output and soaring costs.

In a move that nearly severs its ties with South Africa, Gold Fields' 70-year-old KDC mines near Johannesburg and its Beatrix operations near the central city of Bloemfontein will be renamed Sibanye Gold and floated on the Johannesburg stock exchange in February.

The deal leaves Gold Fields with just one mine in South Africa, the highly mechanised South Deep operation on which it has pinned the bulk of its hopes for growth. The rest of its mines are in Ghana, Peru and Australia.

Gold production in South Africa has halved in the last seven years, knocking Africa's biggest economy off its perch as the world's top bullion producer, a position it held throughout most of the 20th century.

With most of its deposits exhausted by a more than 120 years of industrial-scale gold mining, South Africa now ranks as only the world's fifth-largest producer.

"It is not only Gold Fields. Our decline is no different from the decline you see at AngloGold and Harmony's South African operations," Gold Fields Chief Executive Nick Holland said.

"We are all struggling with the same challenges."

MORE PRESSURE

At the start of the week, Holland said the South African gold industry - the source of 40 percent of all the bullion ever mined - would be gone within five years if nothing changed.

Three months of wildcat strikes this year - the worst industrial unrest since the end of apartheid in 1994 - piled even more pressure on the sector, especially after the police killing of 34 striking platinum miners on August 16.

Beatrix and KDC were hit hard by the unrest, losing a combined 145,000 ounces of production or R2.1 billion in revenue.

Gold Fields shares jumped as much as 7 percent amid hopes that the rump company, devoid of its most troublesome assets, would outperform. They were up 5.6 percent at R108.7 by 14.31 GMT.

Under the deal, shareholders will receive one share in Sibanye, or "We are one" in Zulu, for every Gold Fields share.

"Shareholders would probably have preferred cash, but by holding a share in both companies they will still have the opportunity to realise some value when Sibanye floats," said David Davis, a gold analyst at SBG Securities.

Sibanye will be run by former Gold Fields executive and Gold One boss Neal Froneman. Alone, it will produce 1.4 million ounces a year, putting it on a par with rival Harmony Gold

KDC and Beatrix employ 36,000 people in total and Gold Fields said there would be no job losses as a direct result of the spin-off.

Comments

EWN welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

- Racism (including offensive comments based on ethnicity and nationality)
- Sexism
- Homophobia
- Religious intolerance
- Cyber bullying
- Hate speech
- Derogatory language
- Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the EWN community a safe and welcoming space for all.

EWN reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

EWN is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

comments powered by Disqus