Harmony Gold's R18bn acquisition of CSA Copper mine: a strategic move into copper

Harmony Gold’s acquisition of the CSA Copper mine in Australia for R18.4 billion has cemented the company’s diversification strategy and foray into copper.

Copper, deemed a future proofing mineral, has been the center of merger and acquisition activity among South African and global miners. Now, Harmony Gold, with its diverse footprint of gold in South Africa, is intensifying its exposure in copper.

“The large brownfields projects being pursued by the group are all in copper, signifying Harmony Gold’s strategy to diversify away from gold. However, Harmony will predominantly remain a gold producer even after the slated developments are scheduled to come on-stream,” Robbie Proctor, an investment analyst at Anchor Capital, told Business Report on Tuesday.

The company entered into a binding agreement acquisition to acquire 100% of the securities in New York listed MAC Copper Limited for $12.25 (R219) per share, implying a total equity value for MAC of $1.03bn, or about R18.4bn. Despite this, shares in Harmony Gold fell by 5.75% in afternoon trade on the JSE to R256.36, erasing the previous seven days’ 5.63% appreciation run.

Proctor said,  “Copper has the most favourable long-term demand outlook amongst the major commodities while the supply side is just as favourable” at the moment.

“A mine of this size is relatively inconsequential for the large diversified miners like Anglo American, BHP Group and Glencore, providing the opportunity for smaller players to acquire operating copper mines at reasonable valuations. The CSA mine was actually acquired from Glencore in 2023,” added Proctor.

Harmony Gold CEO Beyers Nel described the Australian mine Harmony Gold was acquiring as “a logical fit with the portfolio” as it meets the company’s “core investment criteria, including increasing free cash flow generation while improving margins at long-term expected commodity” prices.

He said the acquisition of the CSA Copper Mine in Australia was significant for the company as it introduces a high-quality, established underground producing copper asset to the Harmony portfolio and explained that the CSA mine was one of the highest-grade copper mines in Australia. It produced 41 000 tonnes of copper in calendar year 2024,” said

“We believe that Harmony is well positioned to leverage its expertise in underground mining to further enhance operations. Furthermore, the Transaction represents a significant step forward in transforming Harmony into an increasingly de-risked, higher-quality, global gold and copper producer through disciplined and effective capital allocation,” added Nel.

Harmony Gold intends to fund the transaction with a $1.25bn bridge facility together with existing cash reserves. The gold miner has entered into a binding commitment letter with a number of banks that have arranged to underwrite the facility. These include Citibank as global coordinator, initial mandated lead arranger and bookrunner. J.P. Morgan Securities has also been roped in as global coordinator, initial mandated lead arranger while Macquarie Bank Limited will also be involved.

The financing facility has a tenure of 364 days plus a 6-month extension, exercisable at the discretion of the company.

Earlier this year, Nel said the operating environment in South Africa had started to stabilise, helping the company to lift up earnings for the half year to December although analysts had varying evaluations of the gold miner’s diversification strategy into copper.

In the half year to December, Harmony Gold raised revenues by 19% to R35.45bn, with net profits for the period jumping 33% to R7.93bn and headline earnings per share also soaring by 33% to R12.70.

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