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Sibanye said earlier this week that it was considering shutting unprofitable shafts and cutting jobs at its South African gold mines amid a three-month-old wage strike that’s curbing output. Initiatives to contain losses at some shafts at its Beatrix and Driefontein mines have so far been unsuccessful, the company said Thursday in a statement. That could impact 5,870 of its the company’s employees and 800 contractors, it said.
“Contemplating potential restructuring of this nature is never taken lightly and we are aware of the possible impact on many of our colleagues,” Sibanye Chief Executive Officer Neal Froneman said in a statement. “Our best attempts to address the ongoing losses at these operations, have however been unsuccessful and sustaining these losses may threaten the viability of our other operations.”
Sibanye shares surged as much as 7.4% in Johannesburg. The stock was 5% higher as of 10:54am, bringing this year’s gains to 50%.
The company said it hopes consultations will help find ways to minimise and avoid job losses.
Rising costs, including higher power prices, are undermining the economic viability of its gold operations, Sibanye said earlier this week. Three of the company’s gold mines are facing a strike by thousands of workers allied to the Association of Mineworkers and Construction Union.
Sibanye said earlier on Thursday that its full-year loss narrowed because of higher palladium prices and earnings from its US operations. The miner has diversified into platinum-group metals, acquiring assets in southern Africa and the US.
Sibanye expects to report a 2018 loss of $77m, compared with a loss of $333m the previous year.