VILLAGE Main Reef’s (VMR) Tau Lekoa mine could be the first major gold sector casualty of South Africa’s COVID-19 lockdown following the issue of a s189 notice warning of “the potential permanent closure of the Tau Lekoa mine”.

The total number of employees that could be affected is 6,309 comprising the full workforces at Tau Lekoa, the Kopanang gold mine and the West Rand gold plant.

VMR is controlled by Chinese group Heaven Sent which bought the company in 2015. These operations have been making heavy losses in recent years despite record rand gold prices.

The section 189 notice to employees states: “Prior to the lockdown, the Kopanang and Tau Lekoa mines have been making significant losses during the past years. The Tau Lekoa mine made an accumulated cash loss of R1.28bn from 2015 to 2019 and a further cash loss of R107m for the first three months of 2020.

“The Kopanang mine made an accumulated cash loss of R305m from March 2018 to December 2020 and a further cash loss of R37m for the first three months of 2020. These losses, without restructuring of the workforces supporting these mining operations, are unsustainable.”

The notice added: “… operating at 50% production level (until the end of the current lockdown on April 30) will result in significant further losses for the two operations and the company considers that to keep operating these loss-making underground operations with the current workforce while only operating at 50% production levels is not possible”.

VMR said the options included the potential permanent closure of Tau Lekoa; keeping underground operations under care and maintenance after the lockdown; re-starting the Kopanang mine with a reduced labour intensity and re-starting the West Gold plant with reduced utilisation rate.

Solidarity Union general secretary Gideon du Plessis commented: “This did not come as a surprise to us, but we are concerned because there are a lot of jobs at risk here and I think we are going to see more marginal mines starting S189 processes”.