Venkatakrishnan said AngloGold could no longer forecast with accuracy its annual production from SA, which accounts for about a quarter of the company's total output, because of the implementation of safety stoppages by the Department of Mineral Resources through section 54 notices that demand a halt to a mine's entire operations to address safety concerns.
There has been a marked escalation in the cost of safety stoppages for the mining industry, according to a Chamber of Mines document. The total revenue loss amounted to R13.65bn between 2012 and 2015, with the loss in 2015 estimated at R4.8bn, up from R2.6bn in 2012, the document showed.
Platinum producers have spoken of a threefold increase in the number of stoppages ordered in 2016. The chamber is due to meet department officials in coming weeks to discuss the increase in safety stoppages.
AngloGold's lost production of 44,000oz at a time of a high rand gold price was about R834m in forfeited revenue in the first six months of the year.
While acknowledging safety stoppages were warranted in the case of fatal or serious accidents or of safety violations, it was the broad scope of the reasons behind the stoppages of entire mines that was causing concern for AngloGold, Venkatakrishnan said during an interim results presentation to analysts.
"We've seen an increase in the number of section 54 stoppages that don't necessarily arise out of a fatality or highfrequency, high-potential incidents. They come out of mass audits and routine inspections "¦ a marked increase."
The department said companies such as AngloGold had the right to appeal against stoppages through a clause in the Mine Health and Safety Act, but the company had failed to do so.
"It's unfortunate that AngloGold Ashanti has chosen to engage with the department on this critical matter through the media. The rightholder is aware of all the channels to follow should they experience challenges in implementing laws and regulations meant to safeguard the health and safety of employees in the sector," the department's spokesman, Martin Madlala, said.
The fatality rate at South African mines fell to 77 in 2015, from 84 in 2014. So far 42 people have been killed in the first half of 2016.
Chris Sheppard, head of South African mines, said AngloGold had been served 77 section 54 notices by the end of July, with just six related to accidents. "Are they justified and related to safety? Categorically yes. We've no problem with section 54s, but the manner in which they're applied. It can take two to three weeks to ramp up from zero to plus 90% of production volume and that's debilitating for any business."
Source: Business Day
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