Sibanye Gold to cut costs by R305 million

Johannesburg, South Africa — 20 June 2013 – Sibanye Gold Limited, which mines all of its metal in South Africa, says it will trim US$31 million of annual costs in addition to plans set out before its spinoff from Gold Fields Limited  in February.

The gold producer will make the savings from job cuts, reducing overtime and lowering power usage, reports Bloomberg News. The savings are in addition to US$50 of cost reductions already in its 2013 plans, the Westonaria-based company said in a presentation published on its website.

The company will tackle the “inappropriate organisational structures” and “low operational effectiveness” that it inherited from Gold Fields, Sibanye added.

Sibanye was spun off from Gold Fields in February and comprises the Kloof-Driefontein complex, Africa’s largest gold operation, and the Beatrix mines. With its more mature mines, Sibanye will focus on increasing cash flow to pay dividends, while Gold Fields is developing operations outside South Africa with longer life expectancies.

The company is attempting to reduce jobs amid rising trade-union tensions and a decline in the gold price. Labour organisations have demanded above-inflation wage gains before wage talks due to start next month, while gold has dropped 18% this year, reaching US$1,373.32. in London.

Sibanye’s cost-saving plans follow an announcement last month that it would cut 1,110 jobs at its Beatrix West mine in an attempt to return the operation to profit.

“Sibanye needs a new operating philosophy and model and has inherited a bloated service function from Gold Fields,” it said.

Gold Fields spokesman Sven Lunsche declined to comment on the Sibanye presentation.

Source: Bloomberg News. For more information, click here.