DRD’s North West Operations (NWO), comprising the Buffelsfontein (Buffels) and Hartebeestfontein (Harties) mines near Klerksdorp, have experienced a number of challenges this past year. Says Van der Mescht, “With difficulties ranging from an increase in seismicity to flooding and fires, we were hard pressed to achieve the targets set for the business unit.” Production for the year was 14 375 kilograms (462 199 ounces) compared to 2002 production of 16 813 kilograms (540 550 ounces).

    “The high turnover in senior management further impacted on the declining production profile with a subsequent negative impact on the margins, systems and controls. Subsequently, a right-sizing exercise to resource the business unit appropriately became inevitable,” he adds.

    Of significance in the period under review was the strengthening Rand, which had its effects felt across most South African industries, mining not excluded. In an effort to counteract these effects, the NWO have placed particular focus on short-term interval controls, with the ultimate goal of improving face advance, productivity and efficiency targets.

    On a positive note, NWO achieved an impressive one million fatality-free shifts in February 2003. That said, the number of fatalities for FY2003 (12) is unacceptable, and every effort is being made to improve on the operation’s safety performance.

    To realise this “leaner, meaner” NWO, a number of interventions have been put in place, including a culture change from that of a “large” mine to a mature operation in the latter part of the business cycle. Specific controls and systems that have proven successful at Blyvoor – the company’s flagship operation – are also being brought to life. According to Van der Mescht, “The ineffective opening up of certain areas, due mainly to contractors not having delivered against stated targets, has been of particular concern. Hence, infrastructure improvements and adequate processes have been put in place to ensure success going forward, including the appointment of a dedicated project manager as well as mine overseers whose sole responsibility will be to open up pillars for mining.”
   “Open cast mining during the year under review has been disappointing, and as a result, a decision was taken to mothball these operations and focus attention on the underground mining. Obviously, gold price and exchange rate willing, these opportunities will be revisited if and when appropriate,” says Van der Mescht.
 



   Furthermore, a R100 million plant has been approved. The new South Plant will allow the closure of both the high and low grade gold plants at the old Harties section, and will be able to handle all the tonnage from the NWO at a significantly lower cost of R33 per ton compared to the current cost for the high grade gold plant of R57 per ton.
    As a result of the strengthening Rand against the US Dollar, DRD was compelled to give notice of its intention to review the closure of the North West Operations on 21 July 2003. The 60-day review period (as per the Labour Relations Act) allowed management to consult with organised labour on numerous initiatives to avoid total closure. A crisis committee, represented by all unions, was established to discuss and approve initiatives aimed at reducing costs and increasing productivity. The entire process was facilitated by the CCMA whereas the crisis committee meetings were monitored by independent auditors as well as community leaders.

    Uneconomical business units were identified and removed from the proposed business plan to ensure that the operations’ overall cost per kilogram could be reduced to a level which will allow acceptable margins at the current gold price. Various options were considered to optimise production opportunities, acceptable profit margins, as well as the life of mine. This process has allowed a robust plan to be established, with a life of mine of 15 years and sufficient margins to ensure the operations’ profitability. Notwithstanding the best efforts of all of the interested and affected parties, it must be accepted that an operating and financial turnaround of these proportions must anticipate some shaft closures and job cuts.

    Safety wise, the picture painted stays the same. Despite an improvement of some 20% in all accident frequency rates, the current safety statistics are still unacceptable. To address this, the business unit has introduced a range of initiatives intended to remedy the current scenario. Foremost of these is a behavioural change campaign aimed at addressing unsafe behaviour with either corrective and/or punitive action as well as rewarding safe acts in an effort to promote safe working practices across the board. Likewise, a drive to highlight the primary agencies responsible for serious accidents is in place and a “zero tolerance” approach is being adopted in this regard.

    On the labour front, DRD operates in a niche market, turning to account those mature operations other producers no longer deem economically viable. As such, while every effort is made to offer fair and attractive wages and conditions of service, the group no longer bargains collectively with the Chamber of Mines, but conducts its own negotiations.

    Looking ahead, the North West Operations intend:

	Generating realistic and achievable targets that all employees can buy into;
	Defining responsibility and accountability roles for all supervisors, both in production and support services;
	Restoring the business unit to its rightful position in the DRD group, where it generates profits to the benefit of all stakeholders.

    To synergise the Blyvoor and North West Operations, a number of service departments have been centralised, including procurement, stores, trade creditors’ office, the time office and printing facility. Notably, the centralised stores will translate into a 60% reduction in current inventory levels. In addition, as part of this rationalisation, a number of service department officials now have dual responsibility for both operations, including the surface environmental officer, chief assayer, chief geologist, divisional finance manager and divisional mineral resource manager.