Harmony plans costs, services cut

Business, Normal

The National, Monday 6th May 2013

 HARMONY Gold plans to cut its service and corporate costs in South Africa by R400-million (approximately K90 million) and its overall capital expenditure in South Africa and Papua New Guinea by R1.4-billion in the 2014 financial year, chief executive officer Graham Briggs told Mining Weekly Online last week.

He said that the cost reductions were aimed at keeping the company profitable should the gold price stay at levels of around US$1,400 (K2,900) per ounce. 

“We cannot influence or predict the future price of gold. 

“For the past year, the high gold price has assisted us in producing strong margins.

“Should the price fall to levels of around US$1,200 per ounce, we would have to do dramatically more to remain profitable.”

Briggs said no major job cuts were expected, as no shafts would be closed.

“While we will not follow a section 189 retrenchment process, employee numbers will be reduced through a voluntary process. However, the total number of jobs cut should not exceed 500,” he assured.

The company recorded an operating profit of R821-million for the March 2013 quarter, following a 15% quarter-on-quarter drop in gold output to 7,699kg.

Harmony Gold’s capital expenditure for the quarter was R677-million – R189 million less than the Dec 2012 quarter.

“This quarter was a poor quarter with regard to gold production, but this was not unexpected. 

“This reflects on the year’s result from Kusasalethu, highlighting the cost of that type of industrial action.”

He stated that the results for the March quarter reaffirmed that the company needed to do more to meet expectations.

“We are focusing on getting assets such as Kusasalethu and Phakisa into full production. 

“We, the whole of Harmony – management and employees –have to work harder to produce the gold we said we were going to produce. 

“We have had the advantage of a favorable gold price and we must not squander that opportunity,” he asserted.