AngloGold closer to elusive 'zero harm' target with safety record
By Ed Stoddard and Peroshni Govender JOHANNESBURG (Reuters) - South African gold producer AngloGold Ashanti, which runs the world's deepest mines, said on Monday it had completed six months without any fatalities, a first for a company that has struggled with the industry's "zero harm" target. The news helped lift AngloGold shares, up more than 7 percent after its first quarterly earnings since it scrapped a plan to sell new shares and split in two -- despite a profit that was dented by gold prices languishing at four-year lows. Some investors said they had feared a fresh capital raising plan. Instead, AngloGold confirmed its output target and spending cuts. In 2007, an AngloGold worker died on the job every 10 days on average. The company, which mines gold 4 kms (2-1/2 miles) from beneath the earth's surface at Mponeng, west of Johannesburg, was still losing an employee every month in 2013. Chief executive Srinivasan Venkatakrishnan -- known as Venkat -- said Africa's largest gold producer had undergone "a paradigm shift". "That is the only subject matter that I hit reply all to in an email: when a safety bulletin is going out," he said. Among other initiatives, miners have been given the right to stop work in an area if they believe it is dangerous, he added. According to government data, 855 miners were killed in South Africa in 1986 but that number has been falling, with 112 fatalities in 2012, the last year for which full records are available. The workforce is also much smaller. The government has been pushing mining companies to improve their safety record and aim for "zero harm". Over the past three years it has dramatically stepped up on-site inspections and often closed shafts for safety violations, hitting output. The National Union of Mineworkers (NUM), the dominant union at AngloGold, welcomed the news - a rare gesture in South Africa, where labour relations in the mining shafts are raw. "This is what NUM has been fighting for, we do not want fatalities in the mining industry. We hope other mining companies do the same," said NUM spokesman Livhuwani Mammburuu. ADVISER SWAP But it was not all good news for the company, which was forced by angry shareholders to scrap a planned demerger and rights issue in September, five days after it was unveiled. Third quarter headline profit dropped sharply, as the company battled a lower gold price, cost pressure and higher taxes. AngloGold also said it had sacked its advisers, replacing UBS South Africa with Deutsche Securities. UBS have long been advisers to AngloGold, but the bank's role had been in the balance since the failed split. AngloGold said adjusted headline earnings were $2 million in the three months to September compared with $576 million in the same period last year, when the company realised a once-off gain on a convertible bond. But it swung back into profit from a loss in the June quarter, despite a slightly lower dollar gold price as it lifted production by three percent. It aims for full-year production of between 4.35 million and 4.45 million ounces. In line with industry trends it has been scaling back spending, with capital expenditure down over 40 percent to $261 million in the third quarter of this year. Bullion producers worldwide are facing tough times with the spot price currently near four-year lows below $1,200 an ounce, a level that is seen as a "tipping point" that could trigger reductions in output or the closure of marginal operations.
