Harmony plans to idle Target 3

HARMONY Gold Mining Company, SA’s third-largest producer of the metal, said it plans to idle its loss-making Target 3 operation in the country and has started talks with labour unions.

The mine, which employs close to 1,500 people, has made a cumulative R260m loss in the past fourand-a-half years, the Randfontein-based firm said yesterday.

Target is about 250km southwest of Johannesburg.

“Given the current gold-price environment, and the significant capital investment required to sustain operations at this shaft, Target 3 is predicted to continue to make a loss in the foreseeable future,” Harmony said. While the South Block of the resource is valuable, it needs development.

A 22% drop in the bullion price since the start of 2012 has forced the world’s leading gold miners to cut costs and sell underperforming assets to maintain profitability. Barrick Gold, the largest producer, sold three mines in Australia to Gold Fields in October last year. AngloGold Ashanti, the thirdbiggest, sold a mine in Namibia to QKR this year.

Harmony has started talks with labour unions using procedures outlined in section 189 of the country’s Labour Relations Act. Discussions are steered by a facilitator appointed by the state’s Commission for Conciliation, Mediation and Arbitration. Measures to minimise job losses include offering voluntary severance packages, early retirement, and transferring employees with the relevant skills to vacancies at other operations, Harmony said.

The company forecast output of about 1.2-million ounces for the year to end-June 2015 at $1,150/oz to $1,300/oz.

That compares with 1.17-million ounces produced in the preceding 12 months at $1,242/oz, it said on August 14.