Harmony Closes Kusasalethu Mine, Seeks Solution to Labor Unrest

Labor-related disruptions and violence have prompted Harmony Gold to close indefinitely its Kusasalethu mine in
South Africa. (Photo courtesy Harmony Gold)
Harmony Gold announced in early January that following a review of both the finan-cial and operational impact of lawless-ness, violence, and non-compliance to South Africa’s Mine Health and Safety Act at its Kusasalethu mine near Carletonville during the fourth quarter of 2012, it would keep the mine closed until such time as it is safe enough for its employees to begin mining activities.

The Kusasalethu mine was temporarily closed December 20 for security and safety reasons.

Events at Kusasalethu beginning October 26 that led to the closure included violence leading to the murder of two employees and injuring of one person, five illegal underground sit-ins, damage to mine property, physical assault of the mine man-ager, threats that members of management should be attacked or killed, live ammuni-tion fired at police and mine security, non-compliance of policies and procedures of the operation, incidents of employees refusing to comply with normal shift sched-ules and other work-related instructions, an attempt to burn down union offices, and illegal mass meetings and marches by the Association of Mineworkers and Con-struction Union (AMCU).

Harmony said it would enter into a dis-cussion/consultation process with the vari-ous stakeholders as defined by South African law that will take 60 working days from the time the process begins. The aim of the discussion/consultation will be to seek a lasting and sustainable solution to avoid the closure of the mine.

The Kusasalethu mine has 35.1 million mt of mineral reserves grading 6.30 g/mt gold and containing more than 7 million oz of gold. Annual production has the potential range between 260,000 and 300,000 oz/y over an estimated mine life of about 25 years.

The mine employs about 6,000 people. Harmony CEO Graham Briggs said, “We wish to engage with all stakeholders in order to reach an agreement that will bind all employees of the mine and that will pro-vide management with sufficient assur-ances that there will be a return to normal, safe operations and production at the Kusasalethu operations. We wish to seek a sustainable and lasting solution that would ensure that the security, safety and health situation at the mine is normalized and compliant with all applicable laws and the policies and procedure of the mine.”

He added, “Kusasalethu achieved sub-stantial successes in terms of production growth, strong cash flows, and excellent safety results before the December 2012 quarter. We do trust that we will be able to rescue this mine in the next couple of months, provided it can be run safely and return to being cash flow positive.”

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