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Harmony 'won't follow Sibanye' into platinum: Graham Briggs - CEO, Harmony Gold

Publication: Moneyweb
Journalist: Hilton Tarrant

An 8% increase in productivity in terms of grams per man per month.


HILTON TARRANT: South Africa’s third-largest gold miner, Harmony Gold, posted results for the third quarter today. A turnaround in profitability between the December quarter and the March quarter. Headline earnings per share at 12c, with 8 368kg or 269 000 ounces of gold produced in the three months.
   Graham Briggs is the chief executive of Harmony Gold. Graham, [you were] helped by a much better rand gold price, R450 000/kg in the three months, perhaps more rand than gold.

GRAHAM BRIGGS: Hilton, yes, thanks for having me. A few major movers, I think in the quarter, not just the gold price. The gold price obviously helped us a bit, but a decrease in cost, cost control, an increase in grade certainly helped. We've had an increase in productivity. So quite a number of features helped us in this productivity drive as well as profitability drive.

HILTON TARRANT: Costs, as you say, in the quarter practically flat on the headline number. You’ve managed to get a very good grip on cost.

GRAHAM BRIGGS: Yes, Hilton, if you look at the sort of nine months ending March 2013 versus March 2014, you can see that in our total costs, not even the unit cost. We've certainly been able to beat inflation to a very large extent.

HILTON TARRANT: Productivity also mentioned there – we've seen those improvements across the nine months, with production 3% better than the same period in 2013. A slightly smaller workforce. What is your target in terms of getting that productivity in line for the full year?

GRAHAM BRIGGS: Hilton, we put a target of 10%. I guess there's not a huge amount of science in that. We've seen an 8% so far increase in productivity if you measure that productivity in grams per man per month. And certainly we aim to continue that. I think it's vey significant that for a long time Harmony and probably the whole mining industry have had a decline in productivity, and we've managed to turn that around this quarter. We certainly aim to continue to keep that momentum going.

HILTON TARRANT: Graham, the worst quarter though in many years for you in terms of safety.

GRAHAM BRIGGS: Ja, absolutely. A disastrous quarter on safety and very distressing in many ways, not least for the families involved, of course. One has to try and get over these things, learn from the mistakes that were made, and try and address those issues so that they never happen again, Hilton.

HILTON TARRANT: What about the broader labour environment, Graham?

GRAHAM BRIGGS: Ja, I guess an interesting labour environment in South Africa. Somebody would call it some other words, I think. But we need to learn how to be able to manage our assets, dealing with multiple unions – not just a single opinion that’s coming from one major union, but many. And that’s obviously is going to lead to us in our human resources environment doing things a little bit differently, upping our communications so that everyone knows exactly what we are doing, where we are, what the objectives are and so on. And getting a grip company-wise on more of that communication and not leaving it up to the system, whether it be the union system, whatever, to communicate those issues.

HILTON TARRANT: Graham, one of your local peers, Sibanye is on the record as saying it has had a look at some of the underground platinum assets around Rustenburg. Is that something you’d ever consider?

GRAHAM BRIGGS: Hilton, I guess it's a case of strategy of the two different companies. Our company is really gold-focused. On top of that we think those assets are extremely difficult. They were difficult before the strike and they’ll be even more difficult after the strike. Platinum mining, although the mining may not be significantly difficult, there is obviously a huge difference in how you deal with the product, whether it be the UG or the Merensky Reef, and so on. So somewhat difficult. And if we have the experience of Kusasalethu behind us, of how long it's taken to get us back into operation there, I think the platinum mines are still going to have some fairly tough times. And in that tough time I think you need to have the financial capacity to see your way through those. We see ourselves really making sure that our operations do the best they can, and we'll continue to look for gold operations.

HILTON TARRANT: Graham, the final three months of the full year – April, May, June, this current quarter. Do all of these public holidays affect you at all?

GRAHAM BRIGGS: Oh ja, for sure. But fortunately we've had quite a lot of keen guys to be able to work some of those holidays, work some of those times. It's difficult when you’ve got so many holiday strung together with potential long weekends and so on. But I guess in the end our people are also driven by the need to get our bonuses up and so on. I think we've had good cooperation from our staff and from our employees. So it is a tough quarter from the holiday perspective but, saying that, I think we are going to have a good quarter.

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