Trapped Miners
In South Africa
Are Being Evacuated
Rescue is Most Recent Test for Harmony Gold
By ROBB M. STEWART IN JOHANNESBURG AND CHIP CUMMINS IN DUBAI
October 4, 2007 6:52 a.m.
A massive rescue operation under way to bring about 3,200 miners to the surface in a gold mine in South Africa is shaping up to be a crucial test for owner Harmony Gold Mining Co., an international mining concern already struggling with a management shake-up and rising costs amid today's super-heated commodities cycle.
Harmony said Thursday that rescue operations for the trapped miners were proceeding faster than planned, and that no employees had been injured or were in immediate danger. Some 1,700 miners had been brought to safety. Company officials say the main lift at its Elandsrand mine, near Johannesburg, was damaged when a section of pipe broke free and fell into the shaft. The company was bringing miners in small batches to the surface in a smaller, caged lift. Harmony said it had halted production at the site and would investigate the causes of the failed lift.
Rescued mine workers emerge from Harmony Gold's Elandsrand mine in South Africa.
The workers were trapped roughly 2,200 meters underground since early Wednesday. Harmony spokeswoman Lizelle du Toit told Dow Jones Newswires early Thursday that the workers still underground are all safe and have access to water and paramedics. "It's just a matter of getting them all out," she said. "The process is going quicker than anticipated and they expect they may be able to get everyone out by lunch time." Ms. Du Toit added that acting Chief Executive Graham Briggs was heading down into the mine to check on workers and conditions.
The rescue operation is unfolding amid the biggest commodities boom in a generation, with prices for oil, metals, minerals and grain soaring. Natural-resource companies, in particular oil and mining concerns, have scrambled to take advantage of the prices. At the same time, a rush for equipment and labor has sent costs soaring.
Harmony, the world's fifth-largest gold miner, has struggled with costs more than most. This summer, the company emerged from a string of loss-making years. But it disappointed analysts and investors with a big, unexpected loss in the fiscal fourth quarter. At the time, the company said its long-time chief executive and public face of the company, Bernard Swanepoel, was stepping down. The company's top finance officer resigned shortly after.
After the resignations, Harmony's new, interim Chief Executive, Mr. Briggs, complained of "spiralling costs" over the previous six months, and he reiterated the company's plan to push through "intensive cost controls."
Union officials were quoted by local media early in the rescue effort saying workers had complained about poor maintenance and Harmony's high-operating tempo, but the company said the mine shaft in question was in good condition.
Peter Bailey, health and safety chairman for the National Mineworkers Union, told Dow Jones Newswires that some workers are angry at mine management for poor communication regarding the trapped miners. But he characterized the safety record at the Elandsrand mine near Carletonville, southwest of Johannesburg, as relatively good.
International mining executives have been under intense scrutiny by regulators after a series of high-profile mining accidents amid the commodities boom, in particular in the U.S. and China.
The Elandsrand mine accounted for 194,710 of the 2.33 million troy ounces of gold produced by Harmony in the year ended June 30. Harmony acquired Elandsrand and the adjacent Deelkraal mine from AngloGold Ashanti Ltd. in February 2001. The original Elandsrand is a mature operation with declining production, and Harmony is developing a new mine underneath the old one. The project is expected to be completed by financial 2011 and Harmony has projected a life of 18 years for the mine.
Across Harmony's operations, 27 employees died during the last financial year in work-related accidents. The accident rate in South African gold mining has been criticized by labor groups in recent months following several accidents in mines being developed deeper underground, as company's scramble to take advantage of the higher bullion price and look to offset South Africa's declining status as the leading producer of the precious metal.
Johannesburg-based AngloGold Ashanti, Africa's largest gold producer, last week said four workers were killed by falling rock roughly 3,300 meters below ground following a seismic event at its Mponeng mine near Carletonville. AngloGold in July was instructed by the Department of Minerals and Energy to briefly halt production at a shaft of its Moab Khotsong mine near Orkney after two workers were killed when they were trapped by falling rock below the surface.
Last year, 199 mineworkers died in accidents, mostly rock falls, the government Mine Health and Safety Council reported in September.
--The Associated Press contributed to this article.
Write to Robb M. Stewart at robb.stewart@dowjones.com
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