X

This is not a paywall.

Register for free to continue reading.

The news sucks. But your reading experience doesn't have to. Help us improve that for you by registering for free.



Please create a password or click to receive a login link.


Please enter your password or get a login link if you’ve forgotten


Open Sesame! Thanks for registering.

First Thing, Daily Maverick's flagship newsletter

Join the 230 000 South Africans who read First Thing newsletter.

Harmony Gold’s interim earnings tank on SA safety sto...

Business Maverick

INTERIM RESULTS

Harmony Gold’s earnings tank on SA safety stoppages, Papua New Guinea mine challenges

Mine workers secure elevator safety gates at the entrance to the mine shaft at Harmony Gold's Doornkop mine west of Johannesburg, South Africa, on 20 October 2015. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Harmony Gold said on Monday that its interim earnings had tanked in the face of lower prices, safety stoppages in South Africa and ‘geotechnical issues’ at its Hidden Valley Mine in Papua New Guinea.

Harmony Gold’s net profit for the six months to December 2021 fell 69% to R1.4-billion, the company said, despite a 4% rise in production. The company declared an interim dividend of 40 cents per share, less than half of the 110 cents per share it paid out this time last year.  

“This was due to a lower gold price received and the higher all-in sustaining cost (AISC) as a result of safety-related stoppages at some of our South African mines, and geotechnical issues and unplanned labour stoppages at some of our larger underground mines in South Africa and at Hidden Valley in Papua New Guinea,” Harmony said. 

It has been a while since South African mining companies flagged the “safety-related stoppages” imposed by the regulator, the Department of Mineral Resources and Energy (DMRE), as a reason for a fall in earnings. But Harmony, like other South African mining companies, had a worrying regression on the safety front last year. 

In the six months under review, seven Harmony employees were killed on the job at the company’s mines, compared with six in the same period in 2020. 

For the sector as a whole, the numbers were worse: as of mid-December, 72 mine workers had been killed at work in South Africa in 2021 compared with 52 in 2020. This has led to the DMRE taking a more interventionist approach in the halting of operations for safety reasons

Harmony CEO Peter Steenkamp told Business Maverick that the company had incidents at its Doornkop and Kusasalethu mines in South Africa, which “had quite a big impact on our performance in terms of quite long stoppages. And rightfully so, the DMRE – when the whole industry had a spate of accidents – it clamped down.” 

Still, Harmony is off to a good start in 2022. For the first time in its history, the group recorded no fatal accidents in the month of January and had none in February as of midday on Monday. 

The company’s second half might also be brighter thanks in no small part to the Russian invasion of Ukraine, which has pushed up the price of gold because of the precious metal’s “safe haven status”, while undermining the rand as investors flee riskier assets. That combination should flow to Harmony’s bottom line. 

On the other hand, the “geotechnical issues” Harmony experienced in 2021 at its Hidden Valley operation in Papua New Guinea took a turn for the worse in the New Year.

“On 5 January 2022, six kilometres of overland conveyor belt was damaged, which will have a significant impact on annual production at Hidden Valley. The belt replacement has now been completed and recommissioning work on the overland conveyor and plant is under way,” Harmony said. 

The company’s group production guidance for the 2022 financial year has been revised down, which will ultimately affect its earnings. DM/BM

Gallery

Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

No Comments, yet

Please peer review 3 community comments before your comment can be posted