Harmony Gold CEO says it’s beating mining’s #1 challenge – productivity

Graham Briggs, Chief Executive of Harmony Gold tells us how 'hunkering down and doing what needs to be done' has seen Harmony outsmart a rogue gold price and dissenting stakeholders viz. government, labour and shareholders, to improve its productivity and raise production almost 6% in the September quarter. Briggs is confident there's more of the same in prospect.  – CP

ALEC HOGG: Harmony Gold announced that it has increased production by approximately six percent in the first quarter of the financial year – that was the three months to the end of September. Joining us on the line is the Chief Executive, Graham Briggs. Well, the market liked the news, Graham – up by four percent (your share price today), but it's been a rough old year, hasn't it. Thirty percent down in the past year and the gold price not playing ball with you… I guess it's at times like these when you have to try to eke out a little bit of the better grade from underground. Are you managing to do that?

GRAHAM BRIGGS: Yes, you have to hunker down, do what you have to do, try to produce more gold, and save on costs. It's pretty much what gold miners are used to doing these days, but it certainly is a little bit more stressful where the gold price has been although it's not too bad in Rand terms.

ALEC HOGG: Are you still managing to make money at these Rand/Gold prices?

GRAHAM BRIGGS: Yes, that's what our business is about – believe it or not – making money. I know that's not necessarily true for all the gold mining companies but certainly, profitability is number one.

ALEC HOGG: Well, I'm sure it's very true as far as the revenue authorities in the country are concerned because they like to get their taxes from gold mines. We had an interesting few days last week. I know you were there at the Mining Indaba. My sense was that it looks like Government (who rely on their taxes from people like gold miners), labour, and the managers of mines are getting a little closer together. They're not quite there yet, but it has improved.

GRAHAM BRIGGS: My sense is certainly from Government's point of view, that there's a softening of attitudes toward miners and possibly the platinum strike has affected that because the country lost a lot in revenue and that's a big issue. As a company, we generate about R15bn worth of foreign exchange every year, so even us…even before our taxes, are quite important.

ALEC HOGG: Peter Major made some quite strong assertions. Amongst them was that mine managers like yourself, have been under siege for years now by what he called 'the socialisation of the industry'. I want to go into the socialisation aspect. However, do you feel that you've been given a bit of a rough ride, in the past few years?

GRAHAM BRIGGS: I guess it's a case of 'if every time you stick your head out of the door, someone beats it with a bat' you're not going to stick your head out the door anymore. It is a little bit of that in times of stresses and strains where everybody wants a little bit of the flesh/profits of gold mining or any mining, for that matter. Therefore, there's a lot of competitiveness between the various stakeholders, Government, labour, and obviously, shareholders as well. That becomes quite problematic and when you have a softening of attitude, people start to talk and Government recognises that the more profit you make the better it is for everybody then that type of attitude starts coming through again.

ALEC HOGG: One of the points that was made by Jim Rutherford from the Capital Group was the biggest challenge that faces miners around the world and particularly in South Africa, is productivity. In this past quarter – getting back to this production report – did you see much improvement on that front?

GRAHAM BRIGGS: Yes, it's quite simple and obviously, we're quarterly now, so we'll do some more detail on that but if you produce more gold at the same number of people then your productivity has gone up and that's essentially, what has happened during the last quarter.

ALEC HOGG: Does it look like it can continue in that vein, Graham?

GRAHAM BRIGGS: It's a long haul and you're going to have a few bumps along the way, but essentially, the grass needs to grow in the right direction and that's what we're really trying to do.

ALEC HOGG: Graham Briggs is the Chief Executive of Harmony Gold and as he says, the full quarterly results will be released in the next couple of weeks.