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gold-JOHANNESBURG: Gold Fields, the world's fourth-largest bullion producer, is spinning off its two oldest South African mines in the latest sign of the country's gold industry succumbing to declining output and soaring costs.

 

In a move which nearly severs Gold Fields' ties with South Africa, the company's KDC mines near Johannesburg and its Beatrix operations near the central city of Bloemfontein will be renamed Sibanye Gold and floated on the Johannesburg Stock Exchange in February.

 

South Africa was the world's biggest gold producer four decades ago but since then has been overtaken by other producers as its deposits have run low after more than a century of industrial-scale mining.

 

The Gold Fields spinoff - which leaves it with just one mine in South Africa, the mechanised South Deep Gold operation near Johannesburg - comes in the wake of the most serious strikes in South Africa's mining sector since the end of apartheid in 1994.

 

More than 50 people were killed in over two months of violent stoppages at the country's platinum and gold mines in disputes that hit growth and left many companies with higher wage bills when miners did return to work.

 

Beatrix and the 70-year-old KDC mine were affected by the strikes but Gold Fields Chief Executive Nick Holland said on Thursday the decision to sell them was not prompted by the unrest.

 

"There has been an ongoing debate about the composition of the South Africa gold industry and our thinking about this started long before the strike," he told a conference call.

 

Gold Fields lost 145,000 ounces of production due to strikes at KDC and Beatrix, resulting in a loss of revenue of 2.1 billion rand ($237 million).

 

The poor performance of gold mining stocks despite a soaring bullion price over the past few years had also prompted the decision, Holland said.

 

Gold Fields shares, which are down 12 percent this year, jumped 7.1 percent to 109.99 rand by 0816 GMT.

 

Besides its operations in South Africa, now the world's fifth-biggest gold producer, Gold Fields has mines in Peru, Ghana and Australia, and the spin-off will allow it dedicate more time and effort to developing its assets around the world.

 

KDC and Beatrix employ 36,000 people between them, but Gold Fields said there would be no direct job losses as a result of the spin-off.

Copyright Reuters, 2012


 



 
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