Cobus Loots. Picture: SUPPLIED
Cobus Loots. Picture: SUPPLIED

More retrenchments are looming in SA’s embattled gold sector as miner Pan African Resources has begun negotiations to lay off 1,722 people out of 1,812 at Evander Gold Mine.

Gold miners are under pressure from a flat gold price in dollars coupled with a stronger rand, which means they are receiving less rand revenue for their production. And they are facing rising costs of labour and electricity.

This will be the second retrenchment at Evander in less than a year, after 628 employees were laid off in the first half of 2017, with 147 contractors.

Pan African confirmed a statement from the National Union of Mineworkers (NUM) saying it had been served with a section 189 notice.

The NUM said the reason given for the planned job cuts was that Evander was an old mine with deteriorating infrastructure and high input costs.

A Pan African spokesman said it would release more information "when appropriate".

The NUM said it was "totally opposed" to the retrenchments, which showed a need for mining companies to focus on human development, not merely profits.

Earlier in February — presenting Pan African’s financial results for the six months to December — CEO Cobus Loots said the group had two higher-cost operations, Evander underground and the Consort mine at Barberton. Evander underground’s all-in sustaining cost in the six months to December was R673,444/kg, which compares with the group’s average received gold price of R551,506/kg.

Though Evander’s underground operations have been struggling with costs and infrastructure breakdowns, Pan African is planning to start commercial production from a new project at Evander, Elikhulu tailings treatment, early in its 2019 financial year. Tailings treatment is less labour-intensive than underground mining.

Pan African’s shares have plunged from almost 450c in mid-2016 to 125c on Friday, a two-year low.