Pan African Resources’ Barberton mines issued a statement on Tuesday defending its decision to retrench 244 mineworkers, saying illegal mining has made production cuts and job losses unavoidable.
According to the statement, increasing gold theft, including by Pan African employees colluding with illegal miners and community members, has had a “major negative impact” on the mines.
As a result, operating costs at some of Barberton’s business units had become unsustainable over an extended period, said the company.
“We have warned employees and stakeholders many times that the current situation is not sustainable and the most affected by illegal actions is our local communities,” it said.
The gold miner said the retrenchments were “unavoidable” and would allow the mines to operate sustainably, delivering long-term value to stakeholders.
“However, we need our employees and communities to understand that illegal mining is killing the industry, and we are not immune to further cuts should the situation deteriorate any further,” it said.
The SABC reported that several of the mineworkers who have been retrenched by Barberton threatened to take legal action against the mines, saying the retrenchment process was carried out unfairly.
Pan African defended the retrenchment process as transparent and fair, saying that affected workers were provided severance benefits and support in line with their employment contracts.
It added that all legitimate stakeholders were involved in the process, including organised labour, the department of mineral & petroleum resources, traditional authorities and the municipality.
Largest employer
With a direct workforce of 3,759 people, the mines are the largest employer in the Barberton region in Mpumalanga.
The retrenchment process began in February with 980 positions initially identified and then reduced to 244 through redeployment, a joint consensus seeking consultation process and voluntary severance and retrenchment packages.
According to Pan African, the retrenchments come after Barberton management implemented “numerous operational processes to restructure the operations to mitigate losses”.
Over the past three years, the operation had pursued infrastructure enhancements, improved security technology and other cost saving measures, but to no avail.
Pan African spokesperson Hethen Hira said the growth of illegal mining had forced the group to boost its security spending to about $40/oz of gold, from roughly $25 in previous financial years.
“The Barberton ore bodies have visible gold, so it’s very tempting for workers to keep it aside. There are a lot of access holes that we can’t keep track of,” Hira told Business Day.
“We’ve tried very modern security measures — body scanning,
X-ray machines, but they still find ways, so we had to right-size the operation,” he said.
Gold theft spike
In the group’s latest interim results presentation, Pan African CEO Cobus Loots cited a spike in gold theft in the six months to end-December which had resulted in “unacceptable” productivity at Barberton.
While Barberton’s relatively high-grade ore makes the operation particularly vulnerable to attacks, Hira said the group had no intention of disposing of the asset, which he said was core to Pan African’s portfolio.
“We want to sustain it for the long term, but to do so we have to curb the scourge of illegal mining. Arrests are being made, but we need some short-term intervention, and that’s what we’re doing,” said Hira.
Record gold prices have driven a surge in gold theft across the local mining industry in recent months.
According to Sibanye-Stillwater’s latest annual report, the group witnessed its highest number of illegal mining incidents in more than a decade last year, with 540 incidents and 1,487 arrests recorded at its SA gold operations.
At its SA platinum group metals operations, the primary threat is the theft of copper cables, which cost the group R53.4m in direct financial losses last year, down from R113m in 2023.
Sibanye called on the National Prosecuting Authority to clamp down on illegal mining which it said was harming investment prospects.
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