HARMONY: 2,580 +43 (+1.69%)
Harmony Gold in talks to build solar power plant
* Harmony Gold H1 profit slumps 94 pct
* Firm in talks to build solar power plant
(Recasts with solar power plans)
By Tanisha Heiberg
JOHANNESBURG, Feb 12 (Reuters) - South African miner Harmony
Gold is in talks to build a 30 megawatt solar power
plant in the Free State province to supply power to some of its
operations to try to reduce power costs and dependence on
struggling utility Eskom.
Eskom, which produces over 90 percent of South Africa's
electricity, is saddled with more than $30 billion in debt and
has had to impose some of the country's worst power cuts in
years over the past few days.
Eskom's troubles are a big headache for heavy energy users
in South Africa, particularly gold mining companies.
"Our Eskom bill is massive. To replace Eskom would be a
fallacy, we won't be able to do that. We can however, where we
have long term projects, we can start building solar plants,"
Harmony CEO Peter Steenkamp said.
Harmony said it was in talks with the state energy regulator
over a licence to build a solar power plant in Welkom in the
Free State province.
"We have gone through the procurement process and we have
now managed to bed down a developer and an investor in a 30
megawatt facility in Welkom which will relieve some of our
dependence on Eskom," Melanie Naidoo-Vermaak, executive for
sustainable development at Harmony, said.
The company, which uses around 280 megawatts of power at its
South African operations, plans to use the solar plant to help
to supply its longer life assets including its Tshepong
operations in the Free State.
Harmony said it had also taken action to reduce consumption
during peak periods and improved efficiency of pumping
Eskom said last week it was requesting steeper electricity
tariff increases from the energy regulator of 17.1 percent in
2019/20, 15.4 percent in 2020/21 and 15.5 percent in 2021/22.
The utility also implemented a third day of planned power
cuts on Tuesday because of a shortage of generating capacity.
"That will change cut-offs, that will change life of mines
that will have an impact on jobs if Eskom continues with the
very high increases," Harmony CEO Steenkamp said.
Harmony also reported a 94 percent drop in first-half profit
on Tuesday on the back of higher costs and depreciation, and a
weaker rand, even though gold production rose 34 percent to
By 1215 GMT shares in Harmony were up 3.45 percent to 30.28
rand on the back of a robust operational performance.
"They had a number of acquisitions which they had done in
the previous financial year that had one off items which
impacted their profitability but from an operational point of
view the business has done considerably well," Paul Chakaduka, a
trader at investment firm Global Trader.
Harmony, which has 16 percent of its costs coming from
electricity, said it's South African operations were also
impacted by two months of higher winter electricity tariffs and
annual wage increases.
($1 = 13.7990 rand)
(Reporting by Tanisha Heiberg; Editing by Subhranshu Sahu and
First Published: 2019-02-12 08:13:15
Updated 2019-02-12 14:43:20
© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.