March 10, 2017 / 1:03 PM / 3 years ago

Gold Fields CEO predicts drop in first quarter output at South Deep mine

WESTONARIA, South Africa (Reuters) - The chief executive of South Africa’s Gold Fields has warned that first quarter production at its South Deep mine could be lower than expected due to safety stoppages.

Refined gold is poured into moulds to be made into gold bars at South Africa's Gold Fields South Deep mine in Westonaria, 45 kilometres south-west of Johannesburg, South Africa, March 9, 2017. REUTERS/Siphiwe Sibeko

Gold Fields’ last South African asset, South Deep, reported a rise in profit for the first time in 2016 along with a plan to make the mine more profitable with a long term production target of 500,000 ounces a year by 2022.

But the mine’s 2017 production target of 315,000 ounces (9.8 tonnes) may be impacted by stoppages in the first part of the year due to two fatalities, Gold Fields Chief Executive Nick Holland said on Thursday during a mine visit.

“What happens in the short run in no way affects the integrity of the long term plan but it may impact whether the 9.8 tonnes is achievable or whether its a lower number,” Holland said.

The company could not immediately say by how much production would be impacted and is expected to give further details in an update in April.

“The first quarter of the year is not looking good and you are going to see that in our numbers,” said Gold Fields vice president and head of operations at South Deep, Adriaan de Beer.

South Africa’s mining industry has for years complained that government inspectors have been imposing frequent work stoppages over safety, costing billions of rand in lost output and putting mines and jobs on the line.

The mines ministry has justified the blanket stoppages, saying on several occasions that they are needed to save lives.

Gold Fields has said it will spend 2.28 billion rand ($172 million) on underground infrastructure over the next six years, peaking at 582 million rand in 2019. Mechanisation of mines is also seen as a measure to reduce fatalities in the sector.

Part of the revised plan for the mechanized mine includes the construction of an underground workshop to rebuild and maintain machines which is expected to increase their life and improve their contribution to production.

South Deep has presented operational challenges in an unforgiving geology 3 kms (2 miles) beneath the surface with the company previously scrapping production and cost targets for the operation in 2015.

Editing by James Macharia

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