Harmony considering West Africa gold expansion

Peter Steenkamp, CEO, Harmony Gold

HARMONY Gold is considering plans to expand in Africa in an effort to dilute the risk presented by its mature South African operations from which it derives about 90% of its production.

“Certainly, from Harmony’s perspective, we cannot just continue where we are,” said Peter Steenkamp, CEO of Harmony Gold in an interview with Miningmx. “We have to look at going somewhere else.”

He said that Harmony had been able to establish itself in Papua New Guinea (PNG), north east of Australia, and should be able to establish a similar foundation in Africa, which was closer to its Johannesburg base.

“I don’t think people give us a lot of credit for the work that we’ve actually done in Papua New Guinea. That operation that we’ve got, Hidden Valley, is actually a fantastic operation,” he said.

He said the company would “go where the gold was. Where the gold is, is in West Africa. That’s where we need to go,” he said.

“For some or other reason Harmony never went into Africa, so it’s funny that the Australians go into Africa and we go into Papua New Guinea where the Australians don’t necessarily go and work,” said Steenkamp.

“So, certainly, it [African investment] will be on our radar screen. It’s something that we will definitely have a look at going forward,” he said.

He added, however, there were no “concrete decisions”. “The first thing is for us to get the assets that we currently have to perform predictably,” Steenkamp said.

Shares in Harmony have gained 182% year-to-date owing to an increase in the rand gold price which is now around R630,000 per kilogram – an increase of just over 26% in the last six months.

This has had the effect of easing the pressure on Harmony’s South African mines which had been struggling for profitability prior to the depreciation of the rand in December. In some cases, Harmony has recorded a margin of up to 45%, said Steenkamp.

Steenkamp said it was crucial that the company capitalised on the strong price environment by paying down debt and building “a kitty” of cash for investment in Golpu, its gold/copper mining project in PNG, and also to reinvest to a limited amount in its South African assets.

“I think it’s important that we position ourselves now because, obviously, the good days are not always going to be here,” said Steenkamp. “We know it’s a cyclical thing, so whilst we are here, let’s try and fix our assets,” he said.

“We talk about R475,000/kg for some planning benchmarks that we have put in [for the South African mines]. There’s no science behind that: we just said: ‘Look, let’s try and see if we can get everything at R475,000 in a profit situation’.”

“So we are looking in the long-term, and it’s my personal view that the world is probably going to be a much more unstable place in the next 10 years, and that will obviously support the gold price,” he said.


  1. “Hidden Valley, is actually a fantastic operation”

    Impairment of $174m of Hidden Valley’s carrying value last year. (Almost R7 / Harmony share)
    Watut River poisoned with sediment and cobalt.
    Fatalities at what is an open pit mine.
    No cumulative net cash flow for 4 years.

  2. Why are they not expanding operations at Target – probably because anglovaal / avgold was risk averse and did not sink a dedicated shaft for Target which could allow for this option

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