JOHANNESBURG (miningweekly.com) – Despite the planned closure of underperforming and depleted shafts, JSE-listed Harmony Gold is poised to produce more gold and to preserve jobs, its CEO Graham Briggs said on Monday.

"We have spent a lot of money on growth projects, which are just starting to deliver. These projects are in the early stages of ramping up and they are providing job transfer opportunities at a time of closure of older shafts," he told Mining Weekly Online.

On plans to close shafts at the Evander and Virginia operations, Briggs said: "The nature of the process of retrenchment is that you have to notify the union of the number of jobs that may be lost if the operations concerned are closed, and 2 000 is roughly the figure. But now we are talking about how we can minimise retrenchment, and transfer is part of that."

Speaking to Mining Weekly Online on the sidelines of Monday's annual general meeting in Johannesburg – at which shareholders were overwhelmingly in favour of all resolutions – Briggs said that the Harmony's Phakisa, Doornkop, Elandsrand and Hidden Valley growth projects were all gradually coming into production, at the same time as some of the Evander and Virginia shafts were being prepared for closure.

The orebodies of Evander's Seven Shaft and Virginia's Brand operation were depleted, and there was underperformance at Evander's Two Shaft and Five Shaft.

On the production from Harmony's new growth projects, Briggs told Mining Weekly Online: "We see slight increases in both grade and tonnage."

He said that Harmony was planning to produce just over 1,6-million ounces of gold in the current 2010 financial year.

"We are on an upward production curve," Briggs told Mining Weekly Online.

A 2010 financial year production of 1,6-million ounces would represent 140 000 more ounces of production than the 1,46-million ounces that Harmony produced in its 2009 financial year to June 30.

Briggs said that gold production in the current December quarter would be on a par "or a little better" than the 11 615 kg produced in the September quarter.

He told Mining Weekly Online that a process was under way to transfer the personnel from the depleted Brand operation to the new Phakisa operation "and many jobs will be preserved that way".

Also being considered was the transfer of some personnel from Evander to the new Doornkop operation.

"It's a fairly dynamic situation. We'll see what sort of rescue plans are possible and the alternatives we have," he said.

The good news on the horizon, he added, was that the prices of the range of commodities used by the mining industry had flattened, which was reducing the cost pressure that had been exerted on the industry for some time.

There was also optimism, he added, that the proposed 45% a year - for three consecutive years - electricity increase would not be implemented, because of the damage it would do, not only to the gold-mining industry, but also to South Africa as a whole.

"We recognise that the cheap power of the past has gone and that we're going to pay more for electricity, but we don't want to make South Africa noncompetitive with the world, and I think that there is that realisation.

"We haven't been benefiting from the great gold price. $ 1 150/oz is a great gold price and that hasn't converted into an attractive rand gold price," he said.

"One sees the gold price rise to record levels in dollar terms but one doesn't see that translating into a better rand gold price. We are noncompetitive in the global industry because we are sitting with a flat gold price, while the global gold industry is seeing a rising dollar gold price.

"We're not competitive and that is the problem that many companies see and they go for assets outside of South Africa, where there is more benefit," he added.

Hidden Valley, which was on the way to commercial production in Papua New Guinea, was going to be "very important" to Harmony in the future.

"It's going to produce at low cash costs and it provides offshore exposure and diversification for us," Briggs said. All of Harmony's other gold mines are in South Africa.