Of gold producer Harmony’s top 100 suppliers some 70% have
indicated that they want to increase their prices, revealed CE
Bernard Swanepoel at the company’s quarterly results in
April.
He estimated that, of those that intend increasing their prices,
some 65% „have never left the country, never mind imported“.
„Unfortunately, as it is an uncompetitive economy in which
opportunistic pricing occurs – the battle is to keep
suppliers honest,“ noted Swanepoel Increased prices are a concern
for the CE, who has led Harmony in a strategy to buy undervalued
mines and turn them aroundindustrial bench grinder with 3 wide stone.
This effort has resulted in the company earning record operating
profits of R850,9-million in the March quarter, up from
R455,2-million for the quarter ending in December last year.
While this record is partly due to the inclusion of R201,1-million
in respball mills for zircon grinding chinaect of the Free Gold joint venture, as well as the increase
in the gold price following the rand’s depreciation, a focus on
reducing working costs also contributed to profits.
Indeed, over the last three months, the company has embarked on a
so-called ‚cost marathon‘ that has led to a 3%, or R37,4Silica sand mining plant for sale-million,
reduction in costs.
The bulk of this came from the Free State, which managed to achieve
a cost reduction of about R21,4-million, informed Swanepoel.
Randfontein also saved costs in the order of R14-million, while
Evander saved R7,1-million.
Swanepoel described the cost cuts as sustainable and noted that
they arose from better control over stores and overtime, among
other things.
However, savings were somewhat reduced by the cost increase at
troubled Kalgold, where a mill breakdown and a change in grade
resulted in a cost increase of between R8-million and R9-million,
stated Swanepoel.
In addition, Elandskraal was unable to reduce costs, despite
Harmony’s six-month emphasis on a previously-neglected
cost-reducing strategy.
„There are several mines where savings can be improved,“ remarked
Swanepoel, noting that the company would find additional ways of
reducing costs in the coming quarter.
He dismissed contentions that wage negotiations would erode profit,
by saying that a two-year wage agreement was in place, and that the
National Union of Mineworkers would respect that agreement until
the next session of wage negotiations.
„Labour is the least of the company’s challenges,“ he said,
affirming his confidence in the well-established union, while
reinforcing the importance that suppliers may have on increased
costs.
In the past year, South African industry has seen profit erosion
due to the pressure from higher working costs as a result of
inflation, and increased demands from various stakeholders,
Swanepoel recalled.
„The company has decided not to pursue increased production at
higher working costs with the potential of diluting profits, until
it has re-established firm control over unit costs on its South
African operations,“ he stated.