Harmony's gold, copper strategy aims for profitability and diversification

Harmony Gold Mining Company is aiming to improve the quality and profitability of its portfolio as part of the “evolution” of its production profile after the foray into international copper that is expected to boost margins.

Speaking during the financial results presentation for the six months ended December 2024, Harmony CEO Beyers Nel said the group will become an even more profitable and diversified company over time.

This is because of Harmony's strategy to invest only in gold and copper.

“These complimentary metals are for countercyclical diversification and provide a natural hedge against volatility. The combination offers a strategic balance between a safe haven investment in gold and a global demand for copper.”

He said both copper and gold had solid fundamentals driving demand and growth tying into its project pipeline.

“By focusing on these two metals we are creating a focused, efficient and more profitable Harmony with exciting long-term growth prospects,” said Nel.

Harmony is South Africa's biggest gold producer by volume. Among others it operates Mine Waste Solutions near Klerksdorp in the North West and Mponeng, the world's deepest-level mining operation in Gauteng.

The group's international footprint comprises the Eva copper project in Australia and Hidden Valley in Papua New Guinea. Nel said that over time the group will mine out its marginal assets and focus on quality replacement and growth ounce.

“In turn our international gold and copper and South African surface operations will represent a far larger portion of production, offering a lower risk asset portfolio. This clearly indicates how we have re-engineered the company,” Nel said.

Nel said the bulk of capital will be projects that lead to expansion of margins, including investing more than R2bn into the Moab Khotsong and Mponeng operations this financial year.

The group is also injecting R1bn into Mine Waste Solutions.

He said Hidden Valley had been allocated a R600m injection and studies are under way to determine whether the life can be extended further by expanding tailings facilities.

“This demonstrates our clear intention to improve the quality of our portfolio while paying dividends at the same time,” said Nel.

Thanks to the strong gold price, the group recorded a 19% increase in group gold revenue, with free cash flow up 46%.

The group's interim dividend was a record interim dividend payout of R1.4bn.

In November Nel was named as the group's first CEO with a deputy, Floyd Masemula, who is responsible for the South African operations.

Asked what changes to the strategy he will make in the group, Nel said his focus was on ensuring returns for shareholders.

“The job of any manager, any CEO, is to create value for shareholders. We as a management team have had a breakaway, we have a scheduled board bosberaad where we will map a clear pathway around what we see in the future,” he said.

He said, “Harmony is going to be an even better company, in my view, than it is today in the next 10 years. Harmony is on a high. We have a phenomenal management team with a can-do attitude. The team has resilience in the sense that we want to take the company even further from here.

“I guess it is a question of 'if it isn't broken, don't' try to fix it'. We will be responsible and balanced in the way we make decisions,” he said.

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