[Absolutely. The Communist-inspired strikes are aimed at doing real damage to the economy. Then, the bastards turn around and blame the CAPITALISTS for firing workers, etc – meanwhile, its the strikes which damage businesses and drive them into bankruptcy. They’ve been playing this game since the 1980’s. The left it off for a while, but clearly, a new Offensive is under way. The heat is on… this is the Socialisation of South Africa which is now taking place. Jan]

THE wage increase demanded by the National Union of Mineworkers (NUM) was unaffordable, and if the union did not moderate its demands a prolonged strike would result, Harmony Gold CEO Bernard Swanepoel said on Monday.

He was responding to questions about the industry-wide strike that began late on Sunday, after the presentation of the group’s results for the quarter and year to June.

Swanepoel said the package of demands by the NUM took their position closer to 15% than 10%, while the package offered by the mining groups would cost them 6%-6,5%, which is significantly above inflation. The mining industry could not afford a strike, but neither could it afford the increases demanded by the unions, he said.

Highlights for Harmony in the past year included signing an agreement with the unions on the restructuring of the group’s Free State operations and the fact that the introduction of continuous operations at Cooke 2 and Evander 8 is paying off. The group has made significant improvements in safety and is on track to achieve costs of R75000/kg.

The Hidden Valley mine in Papua New Guinea has completed drilling results and upgraded the reserves.

In the year to June Harmony produced 2,97-million ounces of gold, 11% down on last year, at an average working cost of R81839/kg, against R79599/kg last year. The main reason for the decrease in production was the restructuring that Harmony has been implementing for the past 18 months, which is now close to completion.

It also experienced a strike in its Free State operations in March and April, but the decline in production in the quarter was offset by an increased rand gold price as the rand weakened 7%.

Total gold sales fell to R7,8bn (R8,8bn) for the year and the cash operating profit halved to R273m from R580m. Restructuring, depreciation and impairment costs and a loss on the sale and dilution of Harmony’s investment in African Rainbow Minerals (ARM) and the sale of shares in Gold Fields, contributed to a R4,3bn (R835m) loss before tax.

A headline loss of 408c a share, compared with last year’s loss of 308c a share, was made on an increased number of shares in issue, and the dividend was passed.

In April Harmony concluded the sale of its 14% stake in ARM to the ARM empowerment trust. Under current accounting rules, the transaction increases the group’s investments by R853m and its long-term liabilities by the same amount, until ownership of shares passes to the individuals and groups in the trust.

Excluding the sum related to the ARM empowerment trust, Harmony’s net debt equity ratio fell to 4,8% in the June quarter from 16,8% in March. In June Harmony sold 6,5% of its stake in Gold Fields for R2bn, marking the abandonment of an eight-month-long hostile bid for Gold Fields. It still holds 5,4%, which would be used appropriately in the best interests of shareholders “in the short to medium term”, it said.

Swanepoel said the restructuring necessitated by the strong rand was more traumatic for the group than its bid for Gold Fields. Total costs of the bid, including acquisition costs, issuing shares and other costs, amounted to R184m. Although the group was not able to realise the substantial cost savings it had projected if it won control of Gold Fields, it assembled a due diligence team which is focusing on cost reductions within Harmony.

This should realise total savings of R150m, of which R100m will occur in the 2006 financial year.

Harmony has budgeted R1,55bn for capital spending in the 2006 financial year, of which R1,08bn will be spent on developing projects.

Swanepoel said the group would complete restructuring in the September quarter and drive production and volumes. Management would focus on finalising the first phase of Hidden Valley. It was on track to achieve cash costs of R75000/kg.

Source: AllAfrica.Com
URL: http://allafrica.com/stories/200508100070.htm…/p>