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aus MINEWEB vom 23.03.05
Brett Kebble, chief executive JCI
Alec Hogg
'23-MAR-05 09:15'
MINEWEB: Time to speak to Brett Kebble now, on the other big story of the day – the provisional liquidation of Durban Deep’s North West mine. I’m sure Brett’s got a lot to say about it, but before we quiz him, Gareth Tredway, give us some background.
GARETH TREDWAY: We had a busy day today in the mining. DRD Gold today said it would be liquidating its North West operation – the division made up of the Harties and Buffels mines contributes about a third to group production. But in the last half year it made a loss of about R7,000 per kilogram on this gold.
MINEWEB: That works out to nearly R300m?
GARETH TREDWAY: Yes, they said they’re losing about R20m a month at the moment. Earthquakes and underground tremors have added to the problems. One shaft was actually totally destroyed by the seismic events a few weeks ago, plus unfortunately there were some mine deaths there as well. It seems that again the 6,500 employees will be the biggest losers. While they will receive this month’s salary, the accrued benefits will fall under the liquidator’s discretion.
MINEWEB: Why have they done it now, Gareth, why not six months ago, nine months ago, 12 months ago? Unfortunately DRD were not prepared to come on the programme this evening, so we can’t ask them that question directly – but from the interactions that you have with these people?
GARETH TREDWAY: Well, again, to close a mine and then reopen it is quite expensive. So I think they were just waiting maybe for a better rand and so on, the currency to turn. And everybody said it would and it never did. So this is the first casualty and there could be some more – Harmony are also struggling at the moment with some of their marginal mines.
MINEWEB: A warm welcome to BRETT KEBBLE:. Brett, I remember back, pshew, it must be nearly 15 years ago, that Buffels had a similar problem. They had a thing called the Lucas Block. They opened it. There was supposed to be gold there. There wasn’t gold there, and it cost Gencor an enormous amount of money at the time. Is this a continuation, or might there still be hope for Buffels at some point?
BRETT KEBBLE: Well, Lucas Block – of course that was the Three Shaft, I think Buffels Three Shaft if I remember correctly, Alec – the Three Shaft was a very deep shaft, which was sunk in very seismic conditions. And there was gold, but it was very faulted, good grades, but very faulted. And when Durban Deep, or Randgold at that stage, in fact, bought Buffels from Gencor, it was decided that we would create these divisions within the group, and Buffels went into DRD. It was considered to be a difficult mine, but nevertheless one that survived on good grade, and having some areas to work in. This whole thing today has got nothing to do with anything other than trying to work with labour, to see what potential you can unlock in a relationship with them, because the ore bodies are the ore bodies. Every year you mine the ore out of the ground, and after that it’s gone. It’s a wasting asset. So if you can’t work out a deal with your people to everyone’s satisfaction, then the thing will fold. Now we don’t know how much ground is left at Buffels, we don’t know how much ground is left at Harties. But at least the one thing that is possible is to go and have a look and see then whether you can re-impose the type of relationship that you had with labour roughly 11 years ago, when the same marginal mines that we are talking about today first started to close. And of course then everyone said two or three years. We’re 11 years later, and we’re still looking at the same problem, and I think it’s worth another crack.
MINEWEB: Doesn’t that suggest one of two things – suggest that the mine is 11 years older and they’ve taken a lot more gold out, or, secondly, if you don’t know what is in there, that maybe the reporting that has come through from DRD has really not been up to scratch?
BRETT KEBBLE: Look, I think it’s very difficult as time goes by. This mining seems very easy when you’ve got a weak rand environment, because your revenues are high and you can just give labour an annual increase. Of course, it seems a very easy business to be in. Of course, when the revenues decrease, either because you’ve got a fall in dollar gold price, or a rand which is a lot stronger, then you have to find different ways to unlock the value. And I think that reporting when morale is low, when morale is down, becomes a problem. And the natural instinct for anyone in that situation is to go for higher grade blocks, do things, cut corners, create an unsafe working environment. This happens all over the place, and I don’t think that it’s something which is unique to Durban Deep.
MINEWEB: All right. You are keen on the asset, or at least to have a look at it. If you find that there is enough gold in there to make a go of it, how would you address it – differently to the way that it’s been addressed at the moment?
BRETT KEBBLE: I think the first thing is that the whole thing needs to be looked at as a whole. And, in this sense, and when I say “a whole”, I don’t mean a hole in the ground. Firstly, I’m not the right person to speak about the technical side of this, because if there were any proposal to be made, it would be made by the company which Roger is now driving as a mining company, Simmer & Jack Mines. What would happen is that they would have to try and assemble the best team possible in the industry to drive a turnaround on those assets, and that would include all of the South African assets. I don’t think it helps to go and try and bid for assets which are essentially in liquidation, and where the relationship with labour has fallen apart completely, only to be followed two months later by another set of assets which then have to go into liquidation as well.
MINEWEB: With respect, the Durban Deep guys appear to have put these bad assets into liquidation and held on to the ones where they are making money. How are you going to twist their arms into putting goods ones in along with the bad?
BRETT KEBBLE: I think the good assets become bad very quickly, because it’s all a question of morale. And when people see that labour gets handled in a certain way on one suite of assets, they become nervous about how they may be handled in a set of assets which today might be classed a profitable, but which tomorrow will become immensely unprofitable. So it’s got to be an overall thing. This is a social issue. When you get involved in mining, in this type of mining, you need two things. You need to have a social commitment, number one. Number two, you need to be able to have people who can implement short-interval control-management systems, which will ensure that you get the assets working as efficiently as possible.
MINEWEB: Your father, Roger, is getting on. He’s in his sixties now. Does he have the energy still to make a go of what looks like a really tough job? I mean, 10, 11 years ago, you could understand.
BRETT KEBBLE: Roger is stronger than a curried buffalo. He’s strong. He’s still got it in him. And you know I think the thing with him is that his commitment to it then is matched by his commitment to it now. He gets involved, he’s prepared to go down to the mines, he’s prepared to talk to the people, motivate them. That is the man’s strength. He will get up in the morning, and the first call he will make is to the plant manager to find out how things are going, then he will speak to the section manager. He likes that kind of operation. And you’ve got to hand it to him – the thing that turned those mines around 11 years ago. Without him, there wouldn’t be operators in the industry today, like Swanepoel, for instance, who was brought in from Gencor to run Harmony. They are all motivated by him.
MINEWEB: Has he been a disappointment, Bernard Swanepoel, to Roger?
BRETT KEBBLE: I think people’s characters are separate from their operating capabilities. I think Roger always knew that Bernard was the sort of guy who had good operating characteristics. We don’t always know the nature of the beast – from another perspective. But certainly a very successful operator in implementing the sorts of changes that were necessary in the mining industry at the time.
MINEWEB: Brett, what’s your next move, and when can we expect it?
BRETT KEBBLE: The next move will not be made by us. What I’m doing is I’m withholding any of the legal actions that we have against Durban Deep to encourage a spirit of reconciliation, so that everyone can sit around the table and try and find a way through this, so that we can stop references to labour having to negotiate with liquidators, and rather have a situation where we can get Durban Deep to confront the situation that is at hand. And the next move will come from Simmer & Jack, and maybe others in the industry. Who knows? There maybe other people who are willing to help to put together a team that can move in, and at least make the best of an extremely bad situation.
MINEWEB: I see, according to the Sunday Times, that Mark Wellesley-Wood was a prop in his time. I guess your brother Guy was a well-known prop. Are the two of them going to scrum down, and maybe find the right solution here?
BRETT KEBBLE: Well, let me tell you, when I was 16 and my brother was 14, I gave up trying to scrum against him – and I don’t think I feel quite the same thing about Mark. Look, I think the time for the mud-slinging is over. When you consider the fact that there are 15,000 people whose jobs are at stake, and you’ve got communities being where they are, what I would rather do right now is embrace the problem and put the personal things aside.
MINEWEB: Brett Kebble, chief executive of JCI. Maybe the hatchet has been buried, and not in Mark Wellesley-Wood’s head.
