Peter Steenkamp, the chief executive of Harmony Gold, says he is seeing offshoots of stability and recovery in South Africa’s operating environment under the Government of National Unity (GNU), though feels more needs to be done to address investor concerns around crime and logistics as there has already been steady improvements in electricity supply.
Harmony Gold last week lifted headline earnings per share for the year to end June 2024 by 132%, driven by higher gold and elevated production boosted by higher grades and cost containment, with Steenkamp saying there was strong support for bullion prices to remain elevated.
Harmony Gold has said it is preserving cash for capital projects aimed at solidifying its production profile, while it is also investing in copper.
Steenkamp last week emphasised that the company was placing more emphasis on its exposure to copper, which accounts for 21% of its total declared mineral resources of 136.5 million ounces.
“Copper is great for us. First of all we have fantastic assets or projects as far as that's concerned, so we're going to be part of copper going forward. Copper is the right commodity to be in so we are very happy to be part of the copper story going forward,” said Steenkamp.
Steenkamp told Business Report in an interview that there have been positive shifts in South Africa’s operating environment in the few weeks since consummation of the GNU brought together various political parties.
“Yes, I think there's been quite a change compared to prior to the elections in terms of a kind of pact between government and industry, being it the mining industry or other kind of sectors,” he said.
Steenkamp also attributed this to the engagements of the Minerals Council and business representative groupings with the government to solve some of the logistical hurdles constraining South Africa’s mining production and exports. These include port and railway hold-backs that have prompted some miners to stockpile ore at the mines.
“The Minerals Council has been quite involved in trying to resolve the logistic issues in South Africa, the crime issues in South Africa, the power issues in South Africa. We took hands with the government to try and resolve these issues,” he said.
“I think the first observations of what’s happening in the mining sector is that this is really working well… we now get kind of much better policies that will now work for us and investing, but I think importantly we need to as a country address logistics and of course crime.
“Crime in South Africa needs to come under control. Business in South Africa, you know, really wants to be part of the solution and is working very, very tirelessly with government to try and find the solutions.”
Harmony's CEO is not alone in his optimism as sentiment in the business sector in the third quarter of 2024 gradually improved as a result of structural reforms embarked on by the GNU.
The RMB/BER Business Confidence Index (BCI), released last week, rose by another three points to reach 38 in the third quarter, still below the 50-points mark that separates contraction from expansion, following a five-point increase in the second quarter.
RMB said that although respondents still noted constraints, especially weak demand, they were less negative about current conditions and, encouragingly, were more upbeat about business conditions going forward.
For the first time since early 2022, a slight net majority of respondents across the different sectors expect business conditions to improve in the next quarter.
Andrew Widegger, the CEO of City Lodge Hotels, on Friday, releasing the company's annual results, said: “The formation of the Government of National Unity is to be welcomed, which together with the potential interest rate cuts later this year will bring relief to a stagnant economy”.
“The 2025 financial year holds promise for a reinvigorated South Africa and surrounding territories, as the economy grows and foreign investment is realised.”
Cas Coovadia, CEO of Business unity South Africa (Busa), speaking at the 2024 Nedlac Annual Summit on Friday said all social partners needed to create enabling conditions for businesses to grow and do away with onerous red tape and over bureaucratic processes with restrictive conditions which deter hiring and ease of doing business.
“We need to grow the economy – and rethink the economic growth strategy: South Africa must aspire to become a high-income economy, Coovadia said.
“Achieving this necessitates a rethink of the macroeconomic growth policy and strategy, along with a more concerted focus on strengthening the capacity of the State to implement economic growth policy.”
BUSINESS REPORT