Harmony Gold ups renewable energy play with R1bn copper deal

JSE-listed Harmony Gold has bought an Australian copper mine at a time when the metal, a crucial material as the world moves to renewable energy, is closing in on a five-year high. 

The gold-copper producer, with assets in Australia, Papua New Guinea, and South Africa, acquired MAC Copper for $1.03 billion (or about R18.4bn at the time of the deal).

MAC Copper, headquartered in Jersey, owns CSA Mine in regional New South Wales, which it says is one of Australia’s highest grade copper mines. CSA Mine produces about 40,000 tonnes of copper each year and is MAC’s only asset.

The Jersey-based miner is developing the Merrin Mine, which is located in the upper parts of CSA and is expected to provide additional copper and zinc production.

Copper has been on a rising streak, with futures currently trading at an almost five-year high. Worth $4.76 a unit, the price is up just shy of 96% over the past half a decade, having broken $5 in the middle of this month.

The metal offers high electrical conductivity, versatility, and recyclability, which makes it vital for wind turbines, solar panels, energy storage systems, and grid infrastructure. Copper is considered an important metal as the world transitions to cleaner energy in line with the United Nations’ 2050 Net Zero target.

The International Energy Agency has indicated that global renewable electricity generation is forecast to increase by 90% this year when compared with 2023. “In 2025, renewables-based electricity generation is set to overtake coal-fired generation,” it states on its website.

In a statement to shareholders on Tuesday, Harmony Gold CEO Beyers Nel said buying MAC Copper to get hold of CSA “is significant as it introduces a high-quality, established underground producing copper asset to the Harmony portfolio”.

Nel added that the operation “is a logical fit with the portfolio given it meets Harmony's core investment criteria, including increasing free cash flow generation while improving margins at long-term expected commodity prices”.

75-year-old Harmony is transforming into a global gold and copper producer. Harmony has had a presence in Australasia for over 20 years.

Its half year results, for the six months to December, showed that headline earnings per share gained 33% year-on-year, while it reported a record interim dividend payout of R1.4bn. Revenue from gold gained 19% in the period, while it was also gearing up to increase its copper output for renewable energy.

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