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S. African minister calls jobs threat "tragedy"
(Adds reaction from labour minister)

By Melanie Cheary, Reuter
18 January 1996

JOHANNESBURG, Jan 18 (Reuter) - Mining giant Anglo American Corp of South Africa Ltd said on Thursday it might axe 10,000 jobs at the world's biggest gold mine in what Labour Minister Tito Mboweni called a tragedy "too much to bear."

"The company cannot sustain these losses any longer and the board has therefore identified five shafts, which under current price, costs and productivity trends, will have to close during the March quarter," said Bobby Godsell, chief executive officer of the gold and uranium division.

The shafts are at Freegold mine in Free State province. A sixth shaft could close in August, with another six shafts at risk, Godsell said.

Mboweni issued a statement saying he would have a meeting with Godsell soon "so that he can provide me with an extensive briefing."

"I am extremely concerned... The thought of approximately 10,000 workers being retrenched into an already high level of unemployment society is indeed too much to bear.

"The negative impact on our society and others in southern Africa will be too grave. This will be a tragedy of enormous political, economic and social proportions," Mboweni said.

Mine management and union representatives will meet on January 25 to consider the future of the shafts.

Of the five shafts identified for closure, three had limited ore reserves while two still had considerable resources but were currently uneconomic, Anglo said.

The group said it was expecting a 16 percent fall in gold output at Freegold (Free State Consolidated Gold Mines) in 1996 to around 78 tonnes.

Elsewhere in its gold empire, however, Anglo is investing to boost production.

It plans to spend one billion rand ($275 million) on shaft deepening at Western Deep Levels in a move will will extend the life of the mine by 14 years to 2026, resulting in the production of an additional 475 tonnes of gold.

And the company gave a bullish view of gold prices in the year ahead which gold division chairman Clem Sunter said could average $400 an ounce. Gold was trading at just under $398 an ounce on Thursday afternoon.

"I believe that we have every reason to feel particularly positive about the gold market and the gold price in the year ahead," Sunter said.

All South African gold mines are struggling against the backdrop of labour unrest, rising costs, declining ore grades and stagnant prices in recent years.

The Witwatersrand basin around Johannesburg still contains 40 percent of the world's known reserves of gold. But South African mines are having to go ever deeper to tap that wealth, putting them at a competitive disadvantage against shallower deposits elsewhere.

($-3.645 rand)