Government-ordered safety stoppages are meant to enhance safety on mine sites and increase efficiency, but they are having a negative effect in South African mines, at least from AngloGold Ashanti’s experience in the first half of 2016.
Recounting his company’s concern during presentation of half year financials, CEO, Srinivasan Venkatakrishnan, lamented that safety stoppages, which are implemented through the Department of Mineral Resources through section 54 notices, had cost his company 44,000oz of gold (at a time of a high rand gold price was about R834m in forfeited revenue) in the first half of the year. The legislation demands a halt to a mine’s entire operations to address safety concerns.
While acknowledging the relevance of safety stoppages, Venkatakrishnan said: “We’ve seen an increase in the number of section 54 stoppages that don’t necessarily arise out of a fatality or high frequency, high-potential incidents. They come out of mass audits and routine inspections – a marked increase.”
Adding on to what Venkatakrishnan said, 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.”
South African operations contribute about 25% of AngloGold’s total output.