| Thu 28 Oct 2004, 10:33 | | Durban Deep eyes leftovers |
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Mining company is watching Harmony`s hostile bid for Gold Fields very closely
Resources Editor
THE strong rand and a high wage settlement had led to the retrenchment of 38% of Durban Roodepoort Deep`s workforce in SA over the past 12 months, with 7635 workers leaving the company, chairman Mark Wellesley-Wood said yesterday.
A stronger rand and weaker gold price could lead to further job losses, the company warned.
Meanwhile, Wellesley-Wood said he was closely watching Harmony`s hostile bid for Gold Fields.
He said if the bid was successful, it was likely some assets would be offloaded, creating opportunities for Durban Deep.
Wellesley-Wood said in light of Harmony`s assault on Gold Fields, Durban Deep saw `the trend in consolidation in the South African gold mining industry accelerating.
`The current crisis in South African mining could lead to opportunities through consolidation.`
The deal might lead to more opportunities for Durban Deep to reposition itself in the South African gold mining industry, he said. However, he was `extremely open minded on the ownership of the assets, and if something were to change in SA, it might change our strategy`.
Harmony has denied rumours that it might sell some mines to Durban Deep, but Wellesley-Wood did not deny this was possible.
Wellesley-Wood was presenting the company`s quarterly results to September, which no longer include financial data.
He said Durban Deep had enjoyed a 9% boost in production from its Australasian operations, which had helped offset falling output in SA. The strong rand meant that the average gold price in SA for the September quarter was R82785/kg, compared with R85804/kg in the June quarter.
Wellesley-Wood said the exchange rate had `severely threatened margins` and this, along with a 12% wage hike, had forced the group to restructure further, most recently at its Blyvooruitzicht mine. One result had been a 10% fall in local production in the last quarter.
On a more positive note, he said Durban Deep had taken the necessary measures in SA `to arrest the bleeding`, although he warned that future margins were dependent on the rand-dollar exchange rate and the gold price.
He said Durban Deep`s ERPM mine near Boksburg may have a longer life than originally planned.
It was due to close in about May next year, but the mine`s life could be extended by a further six months or even longer, thereby preserving 2000 jobs.
Meanwhile, Durban Deep CE Ian Murray said if the rand/gold price was to remain at about R82000/kg, and productivity improvements could be achieved `no further job cuts will be needed`.
`We can breakeven or make a small margin at that level,` he said.
Wellesley-Wood said that a year ago, 11% of Durban Deep`s production came from outside SA, but in the last quarter that figure had more than tripled to 35%.
He said Durban Deep was exploring acquisitions in a fresh region, to add a third leg to its existing South African and Australasian operations. He also noted that by the end of the year the company would have changed its name to DRDGold.
