Newcrest is slashing hundreds of local and expat jobs in Papua New Guinea where the company has half its mine assets.
Around 150 jobs are set to go at the Lihir gold mine. The mine employs 3000 direct employees, 90 per cent of which are Papua New Guineans, and an additional 2000 contractors, some of whom are residential and some fly-in, fly-out.
Lihir is in New Ireland province, which also comprises the constituency of Mining Minister Bryon Chan. His father, former prime minister Julius Chan, is the governor.
General manager operations Karl Spaleck said “with the process plant upgrade behind us, we are now working on achieving reliable, predictable performance” towards a stable 1.2 million ounces annual output, “optimising the plant and simplifying operations”.
This meant “a bigger focus on using the stockpiled ore, which is an asset that has been building for a number of years”.
The Australian reported discussions are in progress with contractors at the mine, according to Spaleck. Some of the contractors will lose their jobs as a consequence of “the implementation of a simplified business model”.
Newcrest spokeswoman Kerrina Watson said the impact on contractors will depend on the kind of service they are providing.
“We have gone to great lengths since the end of April to explain to our employees and contractors as well as landowners, local government and provincial and national government about the external conditions – the significant fall in the gold price, the biggest in the last 30 years – and what that means in terms of Lihir and its workforce,” she said.
Jobs will also go at the open-pit gold and silver mine in Morobe province, Hidden Valley. This is predominantly a FIFO operation where 1000 employees and 1600 contractors are employed.
Watson told Australian Mining there is no number as yet on how many jobs will be slashed at Hidden Valley. She said this was in an effort from Newcrest to cut costs by 20 to 30 per cent this year.
“It’s not just about jobs, it’s also about efficiency, productivity and improvements in the mining process that will reduce costs there. There will be some job cuts but I’m not in a position to be able to give you a number,” she said.
Hidden Valley is the smallest contributor to Newcrest’s production, and has the highest cost.
Newcrest is aiming to achieve the 20-30 per cent cost reduction over a 12-month period, Watson said.
“For example, the primary crusher just commissioned at the front of the overland conveyor will reduce costly trucking of ore. There is also a plant recovery improvement project under way,” she said.
Newcrest slashed jobs and closed its Brisbane office earlier this month in a bid to cut costs to improve cash flow.
In its business plan review and 2014 budget, it downgraded capital expenditure from $1.5 billion to about $1 billion and exploration expenditure was cut from $160 billion to $85 billion.
The company fired an additional 150 workers in April from its corporate offices in Melbourne and Brisbane last month.
A number of gold miners are being forced to slash jobs and downgrade its outlook as the gold spot price dipped to $US1284.40, down from $1400 earlier this month.
Barrick Gold also sacked a number of people at its Western Australian site, with warnings of more to come.
PNG Prime Minister Peter O’Neill offered assistance to Newcrest recently “to help ensure operations continue”.
It was not, however, direct financial subsidies.
“The company is highly regarded as a leading participant in our resource sector. When a company as big as Newcrest faces…problems, we have to be concerned at the possible impact on our resource sector and our economy generally,” he said.
The company announced a $6 billion reduction in its asset values, with half of the writedowns coming from its PNG projects.