Mail & Guardian (Johannesburg) - July 27, 2001
Stewart Bailey

The study reveals a wealth of facts and figures about the disease and also cuts to the quick of the issue for business -- what the effect will be on the bottom line.

Investors are starting to view sub-Saharan Africa as a risky destination because of the region's staggering HIV/Aids statistics. Latin America has only 1,4-million of the world's reported HIV/Aids cases, while rival gold-producing regions fare considerably better -- North America with 920 000 and Australia (including New Zealand) coming in at a mere 15000. Sub-Saharan Africa's numbers, however, reveal 25,3-million sufferers. In South Africa about one in nine people is HIV-positive, a prevalence of 11,8%. The prevalence of the virus among Gold Fields workers, however, is slightly higher than one in four (26,7%).

Gold Fields executive chairperson Chris Thompson says the above-average infection rate is "because our workforce is in the same age category as the antenatal population that has been measured, that is typically between 20 and about 45".

He says that while the Aids problem has become an increasingly high-profile item on investor agendas, it is difficult to quantify the number of punters who have decided against buying Gold Fields shares because of the perception of the effects of the disease on South Africa's workforce.

"All we know is the kind of questions we get from those who have bought, and we've been able to tell people along the way that it's not a fatal thing for Gold Fields," says Thompson.

Indeed, the Gold Fields study reveals startling statistics and debunks a number of misconceptions about the scale of the disease in South Africa and its potential effects on the region's miners.

The company has even managed to nail down a number of different cost-impact scenarios, each dependent on the success of its prevention and life extension campaigns.

With no intervention from the company's management, Gold Fields will see almost 40% of its workforce carrying the killer virus by 2009. While the humanitarian side of the equation looks devastating, the knock-on effect on the company's costs could be equally destructive and would quickly reverse hard-fought gains made in controlling operational costs over recent years.

Thompson estimates a worst-case scenario of between $30-million (about R250-million) and $36-million (R300-million) a year added to the company's costs at the peak of the Aids crisis in about 2009. This would add about $10 an ounce in costs to the group's figures, squeezing margins that are already unbearably tight.

But like most other mining companies operating in sub-Saharan Africa, Gold Fields is tackling the problem head-on. It undertakes the customary testing and supply of condoms to prostitutes who service the mines' workforces, and workers are subjected to a barrage of HIV/Aids prevention programmes.

There is room to bring the $10 an ounce estimate down, though, depending on the efficacy of the group's prevention and life-extension strategies.

"The R250-million, we think, can probably be reduced by about two-thirds. We actually think more accurately in terms of dollars an ounce, so between $3 and $4, from about $10 an ounce produced. But I should hasten to add that this is largely based on estimates," says Thompson.

The study should go a long way in addressing investor fears over HIV/Aids, which has for so long been an unquantifiable hazard. Whether investors see it as a palatable risk now will depend on Gold Fields's success in stemming the tide of the disease.
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