World number-six gold miner Harmony on Thursday announced details of its proposed cost-saving measures, which it said will deliver at least R1-billion a year in improved pre-tax operating profit at Gold Fields’ South African operations.
“Now that we have seen the detail of Gold Fields defence, we are providing detail of our own cost-savings proposals — we wouldn’t have wanted to give Gold Fields a route map to success prior to the launch of their defence,” Harmony chief executive Bernard Swanepoel said.
Harmony is looking to cut R98-million in costs at Gold Fields’ head office; R330-million in labour costs; R264-million in stores; R132-million in electricity and water, as well as services; other costs of R297-million; and R66-million on contractors, for total savings of R1,185-billion.
Savings from operations will come from R66-million in capital operations and additional optimisation of R150-million, for a total cost reduction of R1,101-billion.
“Last week, Gold Fields announced new cost-savings initiatives of R200-million to R300-million in South Africa, though given the circumstances one has to treat this with a pinch of salt.
“However, it does confirm the potential for cost savings that Harmony has identified. The key difference between Harmony and Gold Fields is that while Gold Fields has spent six years thinking about efficiency improvements, Harmony has a track record of delivering such improvements time and time again,” Swanepoel added.
Harmony has stated that it can achieve sustainable cost reductions equivalent to 15% a year in Gold Fields’ South African cost structure, over and above Gold Fields’ current efficiency initiatives.
Harmony will do this through applying the “Harmony way”, which has been so effective at other mines in South Africa, including mines previously owned by Gold Fields. — I-Net Bridge