Loyal to the country, for better or worse

● From Page 6

year of 85c a share .

This was the 13th consecutive year of dividend payments by the company.

Despite this positive outlook, DRDGold facesmany ofthesame challengesencoun teredbymostbusinesses inSA.Thesein clude containing the threat of growing social unrestarising frompoverty.“Much ofour core business takes place in and around densely populated urban communities, manyof whicharecharacterised bysocial deprivation , ”points out Pretorius. The company has responded by establishing and maintaining socially relevant programmes.

Its Broad Based Livelihoods Programme, forexample,is helpingthousandsofpeople —through training andmentoring and the supply of materials and equipment—to use land availableto them togrow foodand to earn an income by selling produce.

DRDGold ’s second challengeis managing therisinglevelof crime. The companycon tinues to engage withthe government at ministeriallevel throughMinerals Council SA, and directly with the police, and by making improvementsto itsownsecurity,applying new technologies and upskilling security personnel .

The third challenge is power —its qual ity, quantityand reliability.“While wecontinue to support the view that Eskom cannot be allowed tofail, wealso supportthe development of independent power production, which needsto be moreaggressively facilitated by government,”says Pretorius.

The company has alevel of backup energy supply for emergencies and an arrangement for Eskom to give it advance warning of disruptions .

As thelocal economywasunderduress even prior to Covid-19, Pretorius exp ects largersocial obligationsand supplierrisks. “It ’s pointless to say that social delivery is a government responsibility; the state simply does nothave thecapacity todeliver onits own. Society is thereforelooking to the corporate sector to deliver more.

“Foritspart,the corporatesectorhastwo choices: to givemore or have ittaken. Th e priorities needto be improving thequality of education and stimulating the informal economy to provide more jobs —in effect, making the informal economy formal.”

One ofthe effects of theCovid-19 crisis hasbeen areversal inthe trendtowards globalisation,Pretorius pointsout.“Coun tries with established economies have becomemore introspectiveandprotectionist. Forus,thiscould meangreaterchallengesin sourcing consumables for our processes.”

S A’s woes are Harmony’s; they are joined at the hip, says the miner’s CEO

By ANGELIQUE ARDÉ

● In December 2015, just before Peter Steenkamp startedhis tenureas CEOof Harmony Gold in January 2016, Harmony ’s market cap was about R5bn and it had R2.5bn in debt.By theend ofJune2020, themarket cap hadgrown to R43.3bn.Netdebtthis yea r fell to R1.36bn.

S A’slargest goldproducerhas grown its share pricetenfold over the pastfive years. And Harmony was included in the FTSE-JSE Africa top 40 index in September.

It ’sasuccessstory anyCEOwouldtake delight in telling.

But Steenkamp plays it down. “Peo pl e love our story,”he says.“As amajor gold player inSA, we’re the only onewith full exposure to the rand-per-kilogram gold price.”

Thestory, hesays,is oneofa clearand well-understood strategy togrow the asset portfolio. More specifically, it ’s that after Steenkamp rejoinedHarmony in2016, the company started its growth strategyby lookingat assetsin SA,elsewherein Africaand Papua New Guinea.

The aimwas specificallyto enhancethe grade ofthe asset portfolio.The aimwas fo r higher-grade, longer-lifegold assets.At the time, Harmony targeted the SA assets of Anglo Gold Ashanti, as itsremaining SA as sets were a natural fit to those of Harmony.

First,Harmonybought MoabKhotsong,a mine in North West, in 2018; then it b oug ht Mponeng and MineWaste Solutions from AngloGold Ashanti.The dealwas con cl u d ed at the end of September this year. The $200m capital raise forthe funding of the latter transactionwas 4.75timesoversubscribed, a sign of strong investor confidence.

Moab Khotsong added about 230,000 gold ounces, and the recently acquired assets will increase production by about 350,000 ounces, improving thecompany’s profit margins.

Anothernotable transactionwas thepur-

Harmony CEO Peter Steenkamp.

Financial director Boipelo Lekubo.

chasing of jointventure partner Newcrest’s 50% interest in HiddenValley, in Papua New Guinea, in2016. “Wehad torecapitalise that. Ithasbeen agoodminefor thepastfew years , ”Steenkamp says.

Today, hesays, the companyis stronger thanever,boasting better-qualityassetsand “joined at the hip”to SA:“S A’swoes are our woes . ”

Thismeans anunstable andincreasingly costly power supply,among other things. Electricity now accounts for16% of Harmony ’s total costs. “We ’re probably Eskom’s biggest customer, or payingcustomer.The bigworry wehaveis above-inflationescalation in price. We’ve done an enormous amount ofwork tocut consumptionto bare

● Continued on Page 8