HARMONY:  2,428   +4 (+0.17%)  17/11/2018 00:00

Profit drops, mining deaths spike at South Africa's Harmony Gold

* Deaths in Harmony mines spike to 13 in FY2018 vs 5 in 2017

* CEO says people fired over incident that killed five

* Earnings fall, hit by impairments (Updates with CEO comments on safety)

By Ed Stoddard

JOHANNESBURG, Aug 21 (Reuters) - South Africa's Harmony Gold reported a 43 percent fall in annual earnings on Tuesday, hurt by impairments and a loss relating to debt denominated in U.S. dollars, and a setback to its safety record.

The gold industry in South Africa, which has produced a third of the bullion mined in history and is home to the world's deepest mines, has been squeezed for years by depressed prices and soaring labour, power and operational costs.

The challenges faced by the sector, which is mostly labour-intensive and non-mechanised, were underscored by a spike in the number of Harmony workers killed during the financial year, to 13 from five in the previous year.

Safety is a huge issue in South Africa’s deep and dangerous mines and a concern for investors. A spate of deaths at Sibanye-Stillwater's gold operations, including a seismic event that killed seven miners in early May, has raised red flags and brought the issue into focus.

There was a rise in mining deaths overall in South Africa in 2017 to more than 80 from 73 in the previous year, ending nine straight years of falling fatalities.

In one incident last August at Harmony's Kusasalethu operation west of Johannesburg, which fell under the 2018 financial year, five miners were killed when a support pillar burst at a depth of around 3 kms (2 miles).

"We fired people over the incident ... We are taking action," Chief Executive Peter Steenkamp told Reuters.

But he admitted more needed to be done and that more could be done despite the constraints of an unforgiving geology that makes mechanisation extremely difficult and the inherent risks of deep-level mining.

"I firmly believe that eventually we will have a way of automating more things for example through robotics," Steenkamp said.

Harmony is also rolling out a network of permanent safety netting in the tunnel roofs to help prevent falls of rock, a common danger.

Headline earnings per share - the main profit measure in South Africa that strips out certain one-off items - came in at 171 cents, in line with what it had previously flagged to the market, from 298 cents a year earlier.

Harmony produced 1.22 million ounces of gold in the 2018 financial year and said its 2019 target was 1.45 million ounces.

($1 = 14.6363 rand) (Editing by Mark Potter)

First Published: 2018-08-21 08:58:22
Updated 2018-08-21 12:54:36


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