Harmony to close troubled operations

Harmony Gold, South Africa’s third-largest gold producer, is to shed more than 10 percent of unprofitable annual gold production, the ‘Mail and Guardian’ reported on Friday. The move hints at a turbulent round of March quarter production and financial results for South Africa’s gold miners. The largely unhedged Harmony Gold is renowned for making ends meet in any gold price environment.

Hundreds of jobs could be lost in a move that is unlikely to please the government but has received the thumbs up from the investment community. “We’re happy [Harmony] has announced the closures,” said one analyst. The closures are not before time: “They had to give their operations time to turn around.”
Bernard Swanepoel, the group CEO, said it is closing its troubled Randfontein 4 shaft and is considering the mothballing of its Canadian Bissett mine. The group will also shut down its number nine shaft at Evander and various surface operations.

Harmony’s management has come under fire for the operations, which have performed consistently badly in the past. Bissett, in particular, has endured heavy criticism after being labelled the company’s testing ground ahead of other international acquisitions. But Swanepoel says it would be irresponsible of Harmony to continue mining the ore body at costs above the prevailing spot price.