| Wed 13 Apr 2005, 9:12 | | DRDGold must pay for pumping - AngloGold |
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DRDGold must pay for pumping - AngloGold
April 13, 2005
By Stewart Bailey
AngloGold Ashanti has approached the court to force DRDGold to pay pumping charges to keep two closed mines from filling with water and flooding its own nearby shafts, knocking out a fifth of its production and causing damage to assets worth R11.8 billion.
DRDGold liquidated its North West operations on March 22, firing 6 000 workers. It says it is not liable for the charges, which AngloGold puts at R85 million a year. AngloGold says DRDGold is required by law to keep paying.
In papers filed in the high court on Monday, AngloGold applied for an urgent order forcing DRDGold to continue paying the pumping costs.
AngloGold said court-appointed liquidators had told its representatives at an April 6 meeting that the pumps would stop yesterday unless they received payment from DRDGold, AngloGold and Harmony Gold Mining, all of which have mines in the area.
`Since none of these parties have given any undertakings to do this, there is an imminent danger beyond Tuesday that pumping will cease, with the calamitous consequences detailed in this affidavit,` AngloGold said in the papers.
`If urgent relief is not obtained, then AngloGold`s most valuable mining asset in South Africa will be lost. The estimated value of destruction is R11.8 billion.`
Deep mines in South Africa are sunk through water-bearing rock, and flood once pumping stops, as do neighbouring mines, linked together by a labyrinth of tunnels and passageways.
Harmony and Placer Dome are in a similar dispute over Harmony`s intention to flood its loss-making Randfontein Four Shaft, which adjoins Placer`s 50 percent-owned South Deep mine.
AngloGold`s court action was also directed at the ministers of minerals and energy, water and forestry, and environment and tourism, the company said in court documents.
It wants the departments to enforce a number of laws which it says prevent DRDGold from absolving itself of responsibility for keeping the mines dry.
`All we are asking is that people comply with legislation,` said Steve Lenahan, an AngloGold spokesperson, in an interview.
If the pumping stopped, the `inevitable result` would be flooding of AngloGold`s Great Noligwa, Moab Khotsong and Kopanang mines, AngloGold said. `Apart from the serious short-term risk to the safety of miners working in these mines, the flooding of the mines would be practically irreversible.`
Kopanang and Great Noligwa together produced 1.28 million ounces of gold last year, more than a third of AngloGold`s South African output and more than a fifth of its total production of 6.05 million ounces. Moab Khotsong, a new mine 3km deep, is expected to produce an average of 408 000 ounces a year between 2006 and 2018.
As many as 12 000 people work at the AngloGold operations.
`DRD is planning to defend the application,` said DRDGold spokesperson James Duncan. `DRD`s position is that charges of this sort cannot be delegated to the shareholder.`
