Harmony: No mines grab threat from PNG
Johannesburg - The CEO of Harmony Gold Mining Company [JSE:HAR], the world's fifth-largest gold producer, said reported plans to shift mineral ownership in Papua
New Guinea to local communities from the state would complicate negotiations
but nationalisation was not being discussed.
Graham Briggs also told Reuters in a phone interview that
the government had signalled its intent to buy up to 30% of its promising
Wafi-Golpu project, a joint venture with Australia's Newcrest, but that would
depend on its ability to pay for such a stake.
Briggs was talking after reports emerged last week that the
government there was planning major changes to mine ownership rules with a move
to local communities, a policy switch being driven by the country’s Mines Minister Byron Chan.
That took 5% off Harmony's share price on Friday but it was
on the rebound on Monday, adding 3.6% by midday.
"Instead of negotiating with one central bureaucracy that
controls these things in the state, you (would) now have to deal with a whole
myriad of others. There are... probably 800 different landowner groupings, and
therefore you can imagine how complex negotiations would be," Briggs said.
"It's a little bit worrying how the process would be taken
forward if this were to happen. It becomes cumbersome," he said.
Briggs also said such signals could be aimed at voters ahead
of general elections scheduled for next year.
"This is also about a bit of getting the communities to take
note of what the stances are of the various politicians going forward. I don’t
see it as a threat," he said.
He added that most of Papua New Guinea's gross domestic product depends on mineral resources.
"I don't think the government is going to do anything
foolish to upset the whole mineral resources sector."
Analysts have said the talk swirling in trading rooms last
week included nationalisation, which has investors jittery because of a drive
on that front by radical elements of the ANC.
"We are not talking about nationalisation or anything. We
are talking about a shift from the state to the local communities," Briggs
"This is... more
about local community type of participation in mineral rights," he said.
The government has the option to take a stake of up to 30%
in any mine, and Briggs said it had signalled it would like to do that for
Wafi-Golpu, but that would depend on its finances.
"You can always give intent, but do you have the money to do
it? The estimates at the moment are that we will be busy with the studies for
another three years," he said, adding that that was when the government could
step in and buy a stake.
"I don't know what the predictions of the government
finances are in three years' time," Briggs said.
It is also unclear who will be in charge of the politically
unstable country in three years' time.
Harmony is investing heavily in the country, and its
Wafi-Golpu project and its Hidden Valley mine there - both of which it shares
50/50 with Newcrest - are seen as key to its growth and vital to diversifying
its revenues out of South Africa.
The company has said Wafi-Golpu could eventually produce 300
000 to 700 000 ounces of gold a year and also has promising copper potential. Harmony will need to spend between $1.5bn and $2bn to develop its share of
Briggs said if the government bought into the mine, it would
also have to pay 30% of the project's development costs.
if the was a ceo that i would fire in sa.i would be briggs.i thionk harmony is so out of point even their own employees are not motivated(experience). i think he should increase from the inside to the outside.better wages ,better work conditions etc for his own employees before embarking on multibillion dollar investments outside of sa.