JOHANNESBURG (miningweekly.com) – Gold mining company Harmony Gold on Tuesday announced a programme to improve the human dimension of safety and productivity by combining cultural transformation with technological advancements.

The target of the Safety 300, or S300, programme is to safely lift the output per mining crew from the current average of 260 m² per crew per month to 300 m² per crew per month. (Also watch attached Cramer Media video.)

Investing in grade is also poised to drive down costs over time, with Harmony’s experience in operating in higher inflation environments allowing an 8% cost inflation level for planning amid experiencing a below-inflation 6% rise in fixed wages in its 2022 financial year.

As a percentage of South African cash costs, the labour cost has fallen 2%, from 60% to 58% in the 12 months to June 30.

To manage higher Eskom electricity tariffs, Harmony has an initial 30 MW solar project under construction in the Free State and a far larger 130 MW renewable energy plant on the way.

Mines affected by the higher diesel prices are very much in the minority – Hidden Valley in Papua New Guinea (PNG), and in South Africa, the opencast Kalgold mine and mechanised Target 1 mine.

The margins from the large underground Moab and Mponeng mines as well as the surface operations provided a production profit of R9.5-billion.

The once-troubled underground Kusasalethu mine returned more than R800-million in free cash, and additional controls at Hidden Valley have reduced the risk of another conveyor belt failure.

“In addition to investing in our grade, investing in our people is delivering meaningful returns,” said Harmony CEO Peter Steenkamp during the company’s dividend-yielding presentation of results for the 12 months to June 30. A final dividend of 22c a share on top of the interim dividend of 40c a share took the total for the financial year to 62c a share.

“There is a clear link between execution excellence and productivity. Some of our crews are already mining at 700 m² per crew per month, so there's a significant opportunity to improve overall productivity.

“S300 is humanity at work. It's about developing the human part of our business to achieve the art of the possible,” said Steenkamp.

During question time, Nedbank market research head Arnold van Graan requested that the S300 programme be outlined in practical mining terms and asked how the 10% to 15% increase in productivity would be achieved.

In response, Harmony COO South Africa Operations Beyers Nel elaborated on the company’s detailed plans to optimise output at the rockface, fine-tune shift cycle, and implement appropriate technologies in narrow-reef underground mining environments.

“Productivity improvement is identified as a clear aspect of our business that we are looking to improve. In a growth environment, productivity is a fairly cheap improvement if you can realise it,” said Nel.

“At the moment, our run rate is about 260 m² per crew per month and we're looking to improve that to S 300, or 300 m² per crew monthly.

“We’ve got a well-resourced business improvement platform now going in Harmony in the South Africa exco office,” added Nel, referring to the slide displayed showing facetime optimisation, shift cycle optimisation and the responsible use of technologies.

Faster drilling rates are being targeted to increase safe, quality blasts per day.

“So it's not rocket science. It's real practical mining stuff, and if you look at our output per crew, although their average is around 260, you've got crews doing 200 and crews doing 700, so it's basically moving that mean to the 300 through well-resourced, well-equipped and safe work.

“A crew in good environmental conditions is a productive crew and we're working really hard on the South African operations to grow the business in the South Africa context around productivity improvement and driving the costs down with some higher grades that we’re also targeting,” said Nel.

DEVELOPMENT GRADES ‘DRAMATICALLY HIGHER’

In view of grades falling 3% to 5.37 g/t from 5.51 g/t in the 12 months to June 30, Mining Weekly asked why Harmony was confident of getting much better grades from underground operations.

In response, Steenkamp explained that the 3% grade fall of the last 12 months was the result of a lower grade patch at Mponeng as well as the lowest grade area left for the final part of the extraction at the now-closed Bambanani mine.

“But the grades are there and our current development grades are dramatically higher than our current mining grades – and a lot of that is at Mponeng,” said Steenkamp.

“In our business grade is king,” said Steenkamp.

Underground grades are reported separately to surface grades, which are far lower but which are high-margin.

The Zaaiplaats project under way at Moab has grades of up to 9 g/t and the feasibility study under way for the deepening of Mponeng to two more levels is also showing higher grade.

“We’re busy with that feasibility study and if we are going to continue with that. We’ll come back to the market next financial year. We still have enough life left, and next year we need to make a formal decision,” he added.

HARMONY KEEN TO PROGRESS IN COPPER

Copper is enhancing Harmony’s future prospects. “Our journey is not yet complete as we progress our copper story,” said Steenkamp.

In response to Mining Weekly, he added that Harmony viewed itself as a gold/copper play with Wafi-Golpu in PNG being more of a copper mine than a gold mine. If we continue with Wafi-Golpu, we will be part of a copper story. We certainly are also looking at potential copper growth and as a company, we are very keen to progress that.”