All of the country’s major gold mining companies are investing in improving the accommodation of their workforces. “We are not proud of the historical living conditions at our mines and recognise the need to change,” Gold Fields CEO Nick Holland says. Over the next four years Gold Fields alone, which employs some 48,000 people, will spend half a billion rand, upgrading high density accommodation and building new houses for employees.
Gold Fields is also looking to reduce its energy consumption at its South African operations by 10% over 24 months, with a 5% decrease targeted in the first 12. Its plan involves, firstly, relatively low hanging fruit such as conversion to use of electric drills and better pump maintenance management systems, followed by ventilation measures such as using ice plants to chill water that goes underground.
The drive to upgrade important aspects of their businesses takes place at a time when gold mining companies, particularly those in South Africa, are being criticised for decades of poor returns to their shareholders. Gold Fields is the group with the longest life assets in South Africa, including the South Deep mine that will build up to 800,000 ounces a year of production at full capacity in five years time. “The development on 95 level is a key part of this,” Holland says. The company’s annual capital expenditure on South Deep will peak at about R1 billion next year, and from two months into Gold Field’s 2009 financial year onward this mine will produce gold at about 500 kg/month.
Over all its operations, Holland says that the increase of the price of gold has matched the increase in costs of production, the effect being to maintain margins rather than increase or decrease them.
Gold Fields averages US$500/ounce of gold produced, but its new South American Cerro Corona project will bring this down as it will produce gold at US$340/ounce. Its Ghanaian operations come in at about US$480/oz, and Holland says Tarkwa will produce about 750,000 ounces a year for the next 15 years, while the Damang mine will produce 200,000 ounces a year for the next four years.
Holland says of the half a billion rand to be spent on upgrading accommodation for workers in South Africa Gold Fields has already spent R100 million on upgrading hostels and R70 million on houses. The investment on the hostels is seeing the modification of 4,700 hostel rooms that used to have 6.5 residents per room to 1.6 per room by 2012. There will be one bathroom for every 18 people.
The mining company also looked to convert some 950 units into family units, but this was abandoned when it was found it is not a good idea to mix hostels and family accommodation. A workshop with unions raised concerns about introducing women and children into a single sex environment, taking into account the lack of social infrastructure at the hostels. A single hostel at Kloof mine was converted to family units because of its isolated location.
Gold Fields has committed to building 780 new houses by 2012 as the best way to accommodate the needs of families. Some 100 such units are being built at Blybank aimed at operational skilled labour such as rock drillers, and 92 units are being built this year at Glenharvie aimed at operational supervisory personnel.
The Glenharvie units feature 25 three-bedroom, one family, face brick, gabled houses per hectare. These 77 m2 houses have car-ports and the development is surrounded by a palisade fence with a singe access entrance. The mine workers who will live in these houses will pay a nominal amount towards rates, and effectively will get the accommodation for free. The costs of water and lights and maintenance come to at least R2,000 per month and this represents an add-on to the remuneration package.
Gold Fields won’t sell any of the units over the next five years since it requires them, but in time it may begin to sell the homes to employees, and at Blybank it will position itself to eventually sell the homes at cost to those occupants who are interested. The 48 m2 Blybank units are being established on 400 m2 to 500 m2 separate stands. Each site was certified by the Council for Geoscience as suitable for the development.
“We are aware of the mining charter and that gave us a reason to expend funds on our employees’ well being, but we did not just look to comply with the minimum requirements according to the strict letter of the law. We plan to be mining for the next two to three decades in these areas so we need to look after our people,” Holland says. “People must live in an area where there are more facilities, since if they are happier they will be more productive.” It also means the mining companies are looking to improve sports facilities, provide suitable nutrition and upgrade the townships that serve the mines.
Gold Fields owns 6,000 housing units, and is optimising its structure to look after the properties and facilitate schools, shops, tarred roads as part of the broader natural environment.
The company has also developed initiatives to ensure the areas where it mines have other job creation opportunities to fall back upon once mining is over. It established the Living Gold hydroponics rose farm, in which it has invested R70 million since 2003, and has trained in excess of 600 people on the growing of roses for export. The facility has produced 80 million roses to date of which 30 million have been exported, to places as far away as Japan. It is now looking to expand into producing bulbs of exotic difficult-to-grow species. The company is looking for niches where South Africa has a strategic advantage, and it has identified floriculture and aquaculture as two of those areas.