NASTASSIA ARENDSE: Harmony Gold, South Africa’s largest domestic goldmine, is preparing for growth after a two-thirds increase in interim profit, declaring a strong dividend and cutting debt.
For more we are joined by Peter Steenkamp, who is the CEO of Harmony Gold. Peter, thank you so much for your time. Let’s get right into the [first half] period for Harmony Gold. How would you characterise that?
PETER STEENKAMP: Well, we were very, very happy with our performance production-wise. We obviously also had a very good gold price during the last six months, the first half of this financial year, so we’re very pleased with the situation that we have. But, all in all, we also increased our asset base. Three months of Mponeng is in the numbers. So there’s a very good all-in-all performance for the first six months of the year.
NASTASSIA ARENDSE: From an operational point of view, perhaps give us a little bit of colour on what that looks like.
PETER STEENKAMP: In this six months or so we had good grades and good production. I think that we outperformed our plans quite handsomely.
Coming back from the break in the new year we had issues with people coming back from the SADC countries whom we had to test, and also quarantine some. So Covid had a little bit of an impact at the start of the year. But the first six months was a fantastic time.
NASTASSIA ARENDSE: The one news headline that I came across early this morning talked about your hedging strategy. As a result of that, the company realised a R902 million net gain in the past six months. When you look at that hedging strategy, I’m guessing from your point of view it has benefited you quite considerably.
PETER STEENKAMP: That was really the gains on derivatives. It’s not necessary always only the hedging. It’s also on foreign loans. But over time the hedging has been a very good tool that we use to ensure that in bad times we actually do have a good gold price. And it has really helped us to grow the company over the last few years to the company that we are today.
We have looked at our hedging strategy, and we are still on the same strategy, but the how and when – we adjusted that a bit in terms of when we will hedge, to ensure that we actually do lock in very, very good margins going forward.
NASTASSIA ARENDSE: Given the environment that we’re in, be it from a South African perspective or even a global perspective, we’ve all been postulating all kinds of scenarios in terms of what the post-Covid world will look like. For you and your team, what does that look like and what aspects of it are within your control?
PETER STEENKAMP: If we do the things that we actually can control – really making sure that we produce safely, that we produce on target, and we also manage our costs – those are the things that we really can control and those are the things that we focus on.
Obviously Covid was very good for our gold miners in that sense and certainty that was in the world that had a very nice gold price, and was fielding the gold price.
But where we are at the moment, we are still happy with the price. We are obviously looking, going forward, to having much better assets than we had five years ago. So we certainly are in a much better space as a company.
NASTASSIA ARENDSE: For the next six months what does it look like for you and your team in terms of plans and strategy?
PETER STEENKAMP: Our next six months is really to integrate the AngloGold Ashanti assets. We’ve had them for only four months, so there’s still time to integrate all the potentials and all the synergies and all the opportunities that we will have as part of that integration.
There are a lot of things that we can do. We are obviously in the planning cycle, and that will bring us a new plan going forward. So we’re really looking at making sure that the assets that we have are now ticking over, making good money going forward.
NASTASSIA ARENDSE: The one thing everybody is looking forward to is hearing Finance Minister Tito Mboweni’s budget speech tomorrow [February 24], and I’m sure you will be paying close attention to that. What are some of the aspects that you’ll be listening out for?
PETER STEENKAMP: Well, the big thing is to see how we can get more revenue into government, but of course what he’s going to do as far as spending is concerned because our current situation is not sustainable. We cannot keep on spending money that we don’t have. And we’re looking for him to have concrete plans – and not only the plans, but also the execution to ensure that the country gets to resolve these issues and become a country that can become prosperous again.
NASTASSIA ARENDSE: That’s Peter Steenkamp, the CEO of Harmony Gold.