Niël Pretorius

OVER the years Niël Pretorius has shown himself to be a perceptive commentator on the broader picture in the South African economy. The events of the past eight months have borne out the scenario he laid out about a year ago regarding the growing impact of the private sector, which he said was “reducing the risk of an absent and incompetent state”. Specifically, Pretorius pointed out that the private sector had installed 4.4GM of solar power generation capacity — the equivalent of two stages of load-shedding. 

The benefit of that investment became clear from April, when Eskom finally got load-shedding under control thanks mainly to the extra private sector capacity making up for its shocking delivery failures over the past 15 years. One of those projects was built by DRDGold, which says it will deliver big cost benefits for its Ergo operations and help keep that plant going for another 14 years, but there’s a short-term cost that only really became clear at the end of 2024. DRDGold has to spend R10bn over the next three years on Ergo and also on expanding its West Rand gold recoveries operation (Far West Gold Recoveries) to add another ton of gold to annual production. 

That capex is taking financial priority so investors are not seeing any benefit from the current gold price boom. Last year’s final dividend was chopped by two-thirds and the share price performance has been nothing to write home about. Pretorius reckons the short-term sacrifice is going to be more than worth it. Shareholders just need to show some patience and hang in there.