International Business History: Randfontein Estate Gold Mining Company - Research Paper Example

?Topic: International Business History: (Research Project) Randfontein E Gold Mining Company Background Randfontein E Gold Mining Company was founded in 1889 by the mining financier J B Robinson. The present employee strength of the company is 7,350 managed by the chief executive, Alwyn Pretorius, Irector and the official address is CNR Main Reef Road & Ward Avenue Randfontein, GP 1759 (Mergent Online, Oct. 2011). Randfontein Estates is into the primary line business of Gold Ores. Corporate family of the company is quite big including 9 companies. Viewing the sales history of the company, Randfontein’s sales volume, as based on estimated type was $151,707,600 (Mergent Online, Nov. 2011). Till 1998, the name of the said company was not changed but on 30th June 1998, it was renamed the Randfontein Estate Limited. Overview Randfontein Estates Limited is a private company that is into the business of gold mining in Gauteng, Randfontein, Westonaria and Roodepoort districts. Previously, the company has earned a name in South Africa in the 1930s as the largest gold mining company. The mine, it operates is 16 Km long from North to South and presently has four shafts working, the Cooke 1, 2 and 3 and Doornkop. The monthly production capacity at Cooke 3 aimed to be achieved is 180,000 tons (Business Week, 2011). Randfontein has earned a reputation of a long time existing company, currently acquired by Harmony Gold Mining Company. The company has been into other similar businesses as well such as treatment of surface waste materials. It was the leading company into the production of gold ore in the 1900s, as there were many other companies operating in South Africa at that time; in the 1930s it was the leading gold mining company, as stated above. It shows how strongly the company was rooted in its primary business of gold mining. Trackless mining was introduced first of all by Randfontein Estates to extract gold through this technique, which could become possible because of the distinct wide reef type of the ore belt. Other than gold mining, the company is also functional into the business of treating the surface waste materials (Business Week, 2011). Company Introduction Randfontein Estates Limited is a registered company in Johannesburg in South Africa and is also a member of JCI (Johannesburg Consolidated Investment Company Limited) group. Randfontein Estates was acquired by Harmony Gold Mining Company in early 2000. Harmony Gold presently comes on the 5th place worldwide in the production of gold, with a number of projects functioning out of South Africa, namely in Australia and Papua New Guinea (Business Week, 2011). Activities As per the Financial Times Industry Class, Randfontein Estates belongs to mining and extracting industries with the GIS code: 15104030 – Gold. It produces gold as per the US SIC codes with various core codes, primary codes, secondary codes; NAICS 2007 core, primary and secondary codes, such as primary code 21221 for gold ore production and NACE Rev. Codes taken from US SIC codes such as core code 2441 for precious metal mining (Business Week, 2011). Business of Randfontein Estates is expanded in Gauteng, in the Randfontein, Westonaria and Roodepoort districts. Currently, it produces gold bullion bars as subsidiary of Harmony Gold Mining Co., Ltd. (Business Week, 2011). It was a listed company on the Johannesburg Stock Exchange but after acquired by Harmony on 7 July 2000, it was delisted (Mining Company Database, 2011). Political Climate’s Repercussions on Labour Front No industry remains untouched from the labour issues. From that perspective mining industry of the 1900s also was not an exception to it. It suffered huge setback due to political climate when South Africa was engulfed in war from 1899-1902. The gold mining industry made an experiment of importing Chinese labourers to provide a new lease of life to the dying mining industry. The decision of importing labourers from China had impacted the political climate because of the expatriation of the labourers. A number of historians have considered this issue of labour shortage in the mining industry. Although not much can be derived from the historians’ attention on the lives of Chinese and African labourers and outcomes of the Chinese labourers’ importation on Britain and South Africa nor on the lives of Chinese workers working on the Witwatersrand gold mines but one thing is clear, which is that violence was the result of economic downturns and political uncertainty of that time. Management policies were also responsible to a great extent for the labour unrest in South African gold mines (Kynoch, 2006). Other than economic, political and management factors, migrant culture also contributed in the labour violence of the gold mines. Murders were common, resulting in the spread of violence in the nearby areas when deserters started looting the farms and shops in the vicinity. Gold mines had become a haven for provoking violence given the management traditions, economic ups and downs and political transformation in South Africa. The mining industry could not remain untouched from the migrant cultures shaping the kind of mine violence (Kynoch, 2006). Free Standing Companies’ Environment of the 1900s Andrew Godley (2006) has discussed the environment of the 1900s when the free standing companies (FSC) followed a rational organisational alternative by the owners who were sure that world economic scenario offered huge potential to boost the economy by injecting required capital for growth projects but their governance mechanism was not robust enough in foreign markets. The British entrepreneurs had faith in their getting the benefit from their self-proclaimed insight and capabilities in completing complicated ventures. They were in a position to get the benefit of their knowledge and reputation from foreign investors who had doubts about the intentions of the government of that country where the investment was required that it would repay bonds. Entrepreneurs of FSC had links on the London Stock Exchange to raise third tier venture capital for projects out of the country of origin. From this analysis of the monetary and fiscal economic conditions in the 1900s, one can measure the flexible prevailing economic environment for the industrialists of the 1900s. It shows that the entrepreneurs of the 1900s had complete confidence on their capital-raising capabilities. Mine-milling Circuits of Randfontein Estates affecting its Earning Potential Phillips & Paterson (1988) have performed an exercise to find the limit of gold concentration, the way of occurrence and the fields of accumulation in the working of mine-milling circuits of the Randfontein Estate Gold Mining Company affecting the earning potential of the company. The three metallurgical complexes used for obtaining gold started functioning in 1889 but there came an interruption in the production of gold in 1965 with the extinguishing of gold reserves. Further exploration offered favourable results giving the indication of the presence of gold reserves in the Eisburg Reefs, south of the Witpoortjie Horst Block, which constituted the southern extent of the earlier exploited fields. Three platforms were subsequently created to exploit this area. The Cooke Recovery Plant started in 1978; the Millsite Gold Plant started functioning in 1911 and the new Doornkop carbon-in-pulp gold-recovery plant (Phillips & Paterson, 1988). The article by Phillips & Paterson (1988) provides insight on the functioning of the plants and how improvisations were accomplished to attain high metal evaluation parameters from the initial to the last product by introducing extra sampling points at the shaft head and at the plant bins in 1984. These samples provided a catalyst of control over the reef mixture by waste rock at the shafts, providing a hint of the actual quality attained every plant. The method employed for the sampling of these streams was manual stop-belt sampling. Although the method could not stand 100% guarantee of the perfectness yet it was the only viable catalyst of sampling huge quantities run-of-mine ore Thus, at company level, strenuous efforts were being made at Randfontein Estates Gold Mining Company, showing an incessant difference in the quality of the ore coming out in the receiving bins and the head grade at the plant as approximated on the thickener-underflow pulp streams. The sampling method helped in the noticing of the difference in the quality of ore especially on a new run-of-mine milling facility. This proved that huge quantities of gold were getting cornered in the Number 1 run-of-mine mill (Phillips & Paterson, 1988). Thus, Phillips and Paterson (1988) provide a glimpse of the issue related to the locking up of gold in milling circuits, as in early 1930s, a paper was published on ‘The Absorption of Gold in Tube Mills’. Different measures of gold locking up have been in practice, no actual approximation of the total accumulation has been accomplished in the mines of the Johannesburg Consolidated Investment Company Gold Division (Phillips & Paterson, 1988). Phillips and Paterson (1988) have reached on the conclusion after submitting samples of concentrates to mineralogical section of the JCI Minerals Processing Research Laboratory for detailed analysis and organising a discussion on ways of reducing gold lock-up, gold re-circulating loads, liner pockets mill load and behind and between the mill liners that nearly 200kg of gold is lying at the Randfontein Estates Gold Mining Company. Economic repercussions of this locking up of gold could be seen in the shortage of cash-flow and reduction in the income of the company. Finding a tangible solution at that time was planned by including robust liners and employing liner bolts of high-tensile steel as the most dependable option. Introduction of Innovative Cost-saving Processes Blendulf and Everett (1979) have written on the examination of horizontal belt filters for the filtration of gold and uranium in Randfontein Estate Mines, which produced very positive outcomes resulting in the installation of 17 filters in the metallurgical plants of the mine. The article discusses the functioning of the plant, particularly the problems faced in the functioning and maintenance. It all happened at the restart of the old uranium plant at millsite and the making of a new 250 000 t/m integrated gold and uranium plant on the new Cook division of Randfontein Estates Gold Mining Company. Various ways of separation of liquid-solids were discussed. The uranium rotary filters had, since the closure of the plant in 1964, been transformed to gold filters. Discussing the cost factor of the project, Blendulf and Everett (1979) state the fact that for uranium, two stages of rotary-drum filtration are required with opposite-current wash and re-pulping between the stages to reduce the mixed losses to an agreeable level, normally in the 5 to 0, 5% limit. This liquid-solids separation step, based on rotary-drum filters, makes a major part of the capital cost of the total plant. To further their initiative, Blendulf and Everett (1979) conducted a comparative study of the old filtration plant to base their outcomes. The choices deemed the employing of horizontal belt filters (HBF) and of counter-current decantation (CCD). The research indicated that both HBF and CCD had proved capital costs benefits compared with the traditional plant. The comparison between HBF and CCD showed the possibility of a cost advantage towards HBF, particularly when the downward incessant ion-exchange and solvent-extraction areas were considered. With HBF, they would be markedly reduced flow because of reduced wash ratios employed with belt filters. Thus, in a span of less than 2 years, 17 horizontal-belt filters were installed in Randfontein's metallurgical plants. This necessitated a very wise up-scaling of the belt-filter concept leading to a number of suddenly appearing problems like cloth shrinkage and torque issues. Issues were also related to the proper functioning of the plants as standard functional processes had to be determined by experiment and sometimes by trial and error, and at the same time maintaining production (Blendulf and Everett, 1979). Thus, new inroads were accomplished by metallurgists and engineers alike involving the manufacturers along to develop a filtration process that fulfils the future needs of the metallurgical plants by installing horizontal-belt filtration, the innovative process in comparison to the rotary-drum filters (Blendulf and Everett, 1979). Conclusion Research on Randfontein Estates Limited, a company of the 1900s, provides a thorough introduction and overview of the gold-mining company. We come to know the entrepreneurial prowess of the British company’s management practices of running such huge ventures with the help of foreign capital besides the political and economic environment affecting the gold mining industry. We come to know how issues such as labour shortage and labour unrest can create problems for an industry with violence on the vast scale enforcing government and industry heads to take bold decisions such as importation of foreign labour and their sending back to bring normalcy. Good thing is that Randfontein Estates Gold Mining Company is still functional with a new name Randfontein Estates Limited although taken over by another company, Harmony Gold Mining Company. References Blendulf, K. A. G. & Everett, D. J., 1979. Horizontal-belt filtration at Randfontein Estates Mine. Journal of the South African Institute of Mining and Metallurgy. Available from: http://www.saimm.co.za/Journal/v097n17p503.pdf [Accessed 14 November 2011]. Bloomberg Business Week, 14 Nov. 2011. Metals and mining: Randfontein Estates Ltd. Available from: http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=408555 [Accessed 14 November 2011]. Godley, Andrew., 2009. What does history add to international business? Henley Business School, University of Reading. Available from: http://www.henley.reading.ac.uk/web/FILES/management/Andrew_Godley.pdf [Accessed 14 November 2011]. Kynoch, Gary., 2006. Your petitioners are in mortal terror: the violent world of Chinese mineworkers in South Africa, 1904–1910. Journal of Southern African Studies, vol. 31, no.3, pp. 531-546. [Abstract] DOI: 10.1080/03057070500202162 [Accessed 14 November 2011]. Mergent Online., Oct. 2011. Randfontein Estates Ltd. Private company data. Mergent Online. Available from: http://www.mergentonline.com. Phillips, A.B., & Paterson, D.B.., 1988. The 'lock-up' of gold in run-of-mine mills at Randfontein Estates. Journal of the South African Institute of Mining and Metallurgy, vol. 88. No. 10, pp. 333-343. Available from: http://www.saimm.co.za/Journal/v088n10p333.pdf [Accessed 14 November 2011]. Richardson, Peter., 1976. Coolies and Randlords: The North Randfontein Chinese miners' strike' of 1905. Journal of Southern African Studies, vol. 2, No. 2, pp. 151-177. Available from: http://www.jstor.org/stable/2636505 [Accessed 14 November 2011]. Randfontein Estates Limited, 2011. Mining Company Database. Available from: http://miningcompanydb.com/randfontein-estates-limited/ [Accessed 14 November 2011]. Read More