South Africa’s Sibanye declares war on illegal gold miners

WESTONARIA, South Africa: Illegal gold mining has plagued South Africa’s mining companies for decades, robbing the industry and state coffers of billions of rand through smalltime pilfering as well as networks run by organised crime.

Now, with unmined output dwindling and proving more diff cult to extract, one firm has had enough: diversified precious metals producer Sibanye Gold says that it will clear all illegal miners from its shafts by the end of January next year.

“We will have them out then,” Sibanye’s Chief Executive Neal Froneman told Reuters. His campaign slogan is “Zero Zama”, after the Zulu for illegal miners, “zama zamas” or “taking a chance”.

A Gold Fields spin-off formed in 2013, Sibanye is the first company to set itself a deadline to stop the practice and has laid out 200 million rand (US$15 million) to make it happen.

The challenge is immense, however. Sibanye may win most of the battles but it will lose the war in a country beset by joblessness, poverty, crime and porous borders, experts say.

Most zamas are undocumented immigrants from neighbouring countries that have long provided migrant labour for South Africa’s mines who are now being laid off. The syndicates who support them and traffic the illegal metals are well-funded, well-established and highly dangerous, security experts say.

“Sibanye can get it down by 90 percent, but they will never eradicate it completely,” Louis Nel, a security consultant who works on the fertile mining West Rand area near Johannesburg, told Reuters. “You must never underestimate the ability of an illegal miner.”

The stakes are high.

Illegal gold mining costs South Africa’s government and industry more than 20 billion rand (US$1.5 billion) a year in lost sales, taxes and royalties, the Chamber of Mines estimated in an unpublished document submitted to parliament in March.

Areas around both abandoned shafts and working mines are also made unsafe by the theft of copper, power cables and other infrastructure, it said in the document, which was provided to Reuters.

The operational security budget in Sibanye’s gold division alone is 400 million rand in 2017, equal to almost 20 percent of its headline earnings last year.

“If they are able to resolve the issue, it will be a positive,” said Hanre Rossouw, a portfolio manager with Investec, which holds shares in Sibanye.

MULTI-PRONGED STRATEGY

Sibanye’s strategy for eradicating the problem is multi-pronged: a tip-off and reward system to encourage employees to report suspicious activity, tactical security units that can go underground to make arrests, and access checks such as biometrics, also used by rivals such as Harmony, to ensure only authorised personnel gain entry.

The tip-off system is aimed at employees who may be on the take, providing the zamas access to working shafts, the biometrics prevent zamas from gaining access and the tactical units are there to arrest the illegals if they do get through.

A decade ago, virtually none of these systems existed.

One…

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