Time to hit pause on gold miners

Even as the rand gold price soars, the uncertainties around miners of the yellow metal call for a temporary halt on their shares.

- David McKay

The pressure on government to relax, if not lift, lockdown measures is only likely to grow over the coming weeks, not least of which from South Africa’s gold companies.

Peter Steenkamp, CEO of Harmony Gold, was obviously careful with his wording at the firm’s first-quarter presentation mid-May, but the message was nonetheless clear: Nearly a month after the end of the initial 21-day Covid-19 lockdown, his company is ready – hopeful even – of resuming full production.

“I’m confident that the mining sector has positioned itself well, so I’m also confident we could get relief at the next level,” he said in response to analyst questions.

The relief to which he refers is that the country’s underground mines are allowed to progress to 100% production at level 3 of lockdown restrictions. The current dispensation in terms of the government’s amended lockdown regulations is that underground mines operate at 50% of capacity, whereas mechanized, less labour-intensive open-cast mines are permitted to operate at full throttle.

“We have done a tremendous amount of work so we can get back to 100%. The minister [energy and mineral resources minister Gwede Mantashe] has been to the operations. We have testing and quarantine facilities in place, and we have had good support from unions,” he said.