Newcrest cuts more jobs as gold enters bear market

June 26, 2013

Falling gold prices has led Australia’s largest gold producer, Newcrest Mining Ltd., to announce that it will cut about 150 jobs, or 5 percent to 7 percent of the workforce, at its Lihir Mine in Papua New Guinea, Bloomberg reported.

“These changes are being made because of exactly what we have been talking about for many months, the lower gold price and what we have seen has been the largest fall in 30 years,” Kerrina Watson, a spokeswoman for the Melbourne-based company told Bloomberg.

As part of a reorganization, Newcrest is taking a charge of as much as A$6 billion ($5.6 billion), the largest in gold mining history. The amount includes writing down the entire A$3.6 billion in goodwill on the Lihir mine that it acquired in the A$9.7 billion takeover of Lihir Gold Ltd. in 2010.

The company, which now has a market value of A$7.3 billion after slumping 57 percent this year, had already said it would shed 250 staff and close a corporate office in Brisbane under plans to respond to falling prices.

Gold futures have slumped 24 percent this year in New York, and fell to as low as $1,268.70/oz on June 21, the lowest since September 2010, after the Federal Reserve chairman Ben S. Bernanke said the central bank may trim stimulus this year.

Cuts to jobs at Lihir follow the completion of a $1.3 billion expansion program and a decision to reduce mining and focus on processing stockpiles at the plant, Watson said.

Newcrest hasn’t held talks over the cuts with Papua New Guinea’s Prime Minister Peter O’Neill, but is prepared to hold a meeting to discuss its plans, she said.

The company has joint ventures with Harmony Gold Mining Co. in Papua New Guinea at the Hidden Valley Mine and the Wafi-Golpu exploration project, which Newcrest said Dec. 31 contains at least 12.4 million ounces of gold.



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