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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (29447)	11/25/2008 9:21:30 AM
From: LoneClone	Read Replies (1) \| Respond to of 193482

ERPM Hovering On The Brink Of Closure Again By Charlotte Mathews 24 Nov 2008 at 10:06 AM GMT-05:00 resourceinvestor.com The decision to stop all underground operations at DRDGold’s East Rand Proprietary Mines (ERPM) is more than just the potential death knell of a 111-year-old mine and the loss of almost 2,000 jobs. JOHANNESBURG (Business Day) -- It also raises a host of unknown consequences for water levels in the area. ERPM was pumping about 60 megalitres of highly acidic water a day out of its mine. Water affairs and forestry department water quality manager Marius Keet says the water level is expected to rise to 500-600 metres below the surface, and the mine is considering building a new pumping station. There is no immediate danger. A government task team will meet this week to discuss the issue in detail. This is not the first time in ERPM’s history that closure has been imminent. Throughout the 1990s, when the unprofitable mine changed hands several times and the government vacillated on giving it a subsidy to pump the water, closure was threatened several times. At one point the mine was put into provisional liquidation, from which it was bought by German entrepreneur Claus Daun and empowerment group Khumo Bathong. Each time the underground operations have been resuscitated, and the National Union of Mineworkers (NUM) is hopeful that will happen again. This May, when DRDGold said it was looking at ways to keep the mine open, DRDGold SA CEO Niel Pretorius said the mine was a significant asset for the group because of its surface resources and location in relation to DRDGold’s other East Rand operations. The water being pumped from underground would be needed for the Ergo tailings reprocessing operations. DRDGold has been exploring two adjoining lease areas, which it calls ERPM Extensions 1 and 2, that could hold sufficient resources to extend the life of the mine by 20 years. ERPM, near Boksburg, about 25 km east of Johannesburg, was established in 1893 and has produced more than 1,472 tons of gold (equivalent to 52-million ounces) in its lifetime from more than 50 shafts. It is an ultradeep mine, extending about 3.5 km below the surface, but is not the deepest mine in South Africa. Over the three years to June last year, the cost of plugging the working area from rising water levels was R35m, of which the state contributed 65%. But water levels were continuing to rise. The final straw was the death from asphyxiation in September of two workers, who were in the southwest vertical shaft for routine maintenance. Mine management decided the unpredictable gas levels made it too difficult to send people underground for monitoring and maintenance of the pumps. Last week, it said it had put the mine on care and maintenance, and served notice on the unions of pending retrenchments. A year ago, ERPM employed about 2,000 people, but it retrenched 200 people earlier this year. Lesiba Seshoka, spokesman for the NUM, said on Friday the union was totally opposed to the closure. It was at the NUM’s insistence that the government put more than R100 million into pumping subsidies for the mine over the years, he says. If DRDGold cannot operate the mine, the NUM wants the minerals and energy department to revoke its licence so that it can be operated by another owner. DRDGold spokesman James Duncan says the group is willing to look at all options, including selling the assets piecemeal. The pumping subsidy arose because ERPM was “the last man standing” in the area after the closure of surrounding mines, so it had to carry the burden of increased inflows of water, Duncan says. It is spending R40 million a year on pumping, of which government is contributing R8 million. Together with the plugging project, that means government has put in R54 million to the water problem over about four years against DRDGold’s R140 million. Asked whether it might not be high time to close such an old mine, Seshoka says a study on extending the mine’s life a couple of years ago showed that it still contained high-grade areas, and could last another 20 years. Duncan says that putting the underground operations on to care and maintenance does not sterilise the reserves and resources, despite rising water levels. The ERPM 1- and 2-extensions still exist, and they are in separate lease areas away from the rising water levels. But the issue is that they would have been most costeffectively exploited from the far east vertical shaft. In today’s environment, the capital costs of building new deep-level shafts would be prohibitive.