EX-15.1 12 exhibit151iar2020new.htm EXHIBIT 15.1 Exhibit


Exhibit 15.1: Integrated Annual Report for the 20-F 2020 dated October 29, 2020


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INTEGRATED ANNUAL REPORT FOR THE 20-F 2020


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CONTENTS

About this report
Corporate profile
Business model - how we create value
Delivering on our strategy
Our leadership
Chairman’s vision
Chief executive’s review
Our business context
 
Our external operating environment
Our risks and opportunities
Stakeholder engagement and material issues
Sustainable development - delivering on responsible stewardship and SDGs
Ensuring stability, employee safety and well-being
 
Safety and health
Employee relations
Delivering profitable ounces
 
Operational performance
Exploration and projects
Managing our social and environmental stewardship
 
Socio-economic development
Environmental management and stewardship
Mining charter III compliance scorecard
Corporate governance
Remuneration report
Audit and risk committee: chairperson’s report
Social and ethics committee: chairperson’s report


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ABOUT THIS REPORT
Harmony’s 2020 Integrated Annual Report is for the financial year ending 30 June 2020 (FY20). This report, which is aimed primarily at investors, covers all our operations and activities in South Africa and Papua New Guinea, their impacts and most material matters during this period. Significant events occurring after year-end and before the date on which this report was approved are also reported.
This Integrated Annual Report aims to provide a holistic view of the company. It includes information on our business model, which aims to explain our strategy and how we create and share value, and also covers our performance - environmental, social, governance, operational and financial - for the year. Our overarching governance framework aimed at an integrated risk based approach guides all decision-making and is critical in ensuring and protecting value creation and delivery on our strategic objectives.
We aim to provide balanced, accurate and accessible information to enable the reader to assess our performance over the past year and our ability to create value over time.
In compiling this report, we have determined our reporting boundary by taking into account:

Integrated reporting boundary
Risks and opportunities
resulting from our external operating context
Risks and opportunities resulting from operational, social and environmental variables
Financial reporting boundary
Wholly-owned subsidiaries/entities
Joint ventures
Investments over which we have significant influence
Risks, opportunities and material matters stemming from engagement with stakeholders – investors, employees, communities, governments/regulators, suppliers
Materiality
This report addresses those aspects that we consider to have, and most likely will continue to have, a material impact on our performance and ability to deliver on our strategy and its objectives, and our ability to create value, in the short, medium and long term.
Engagement with stakeholders and their primary concerns are key in determining these aspects. For a better understanding of these, see Stakeholder engagement and material issues and Our risks and opportunities, where we describe the context for the material issues and risks identified and explain how they are being managed.
While this report is aimed primarily at investors, together with the ESG Report 2020 and the ESG Data Tables which we have compiled this year, it addresses the information requirements of all other stakeholders.
Reporting frameworks, guidelines and standards considered in compiling this report include:
International Integrated Reporting Framework
King Report on Corporate Governance for South Africa, 2016 (King IV)
Global Reporting Initiative (GRI) Standards for sustainability reporting
United Nations Sustainable Development Goals (SDGs)
International Council on Mining and Metals - 10 principles
United Nations Global Compact
Voluntary Principles on Security and Human Rights
JSE Listings Requirements
World Gold Council’s Responsible Mining Principles

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We have also considered the Principles for Responsible Investment, a United Nations-supported international network of investors, which reflect the increasing prominence of environmental, social and governance (ESG) issues to investors.

OUR 2020 SET OF REPORT INCLUDES:
Integrated annual report 2020
Mineral resource and mineral reserves 2020
Report to shareholders 2020
Financial report 2020
ESG report 2020
TCFD report 2020
These reports together with other supporting documents are available online at www.har.co.za. Other additional information can be found at www.harmony.co.za.

OTHER REPORTS:
Form 20-F
Annual report filed with the United States Securities and Exchange Commission, in compliance with the listing requirements of the New York Stock Exchange
Global Reporting Initiative Scorecard
An index of the indicators reported in terms of the Global Reporting Initiative
Operational Report 2020
Detailed information on each operation

DIRECTORS’ RESPONSIBILITY
for the Integrated Annual Report 2020
The Harmony board of directors has ultimate accountability for the integrity and accuracy of this Integrated Annual Report. It is the board’s view that this report has been prepared in accordance with the International Integrated Reporting Council’s Integrated Reporting Framework. Having reviewed the report and applied its collective mind, based on the recommendations of the audit and risk committee and the social and ethics committee, the board confirms that this report addresses the most significant and material issues currently facing Harmony and that it presents a balanced, accurate and representative view of the company and its strategy, its overall performance in the past financial year and of its future ability to create and protect value.
The remuneration report was reviewed and approved by the remuneration committee.
The board approved this report on 23 October 2020.

Dr Patrice Motsepe
Chairman
Peter Steenkamp
Chief executive officer
Boipelo Lekubo
Financial director
Fikile De Buck
Chairperson: Audit and risk committee
Dr Simo Lushaba
Chairperson: Social and ethics committee
Vishnu Pillay
Chairperson: Remuneration committee

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REFERENCE
A full glossary of terms is available on the website, www.har.co.za.
Throughout this report “PGK” refers to kina, the currency of Papua New Guinea, “Moz” to million ounces, “Mt” to million tonnes and Mlb to million pounds. All production volumes are in metric tonnes (t), unless specifically stated as imperial tons.
While our reporting currency is the South African rand, the US dollar equivalents of significant financial metrics, together with the applicable percentage movements, are also provided to aid sector and peer comparisons.

CORPORATE PROFILE

OUR BUSINESS
Harmony, a gold and copper mining and exploration company, operates in South Africa and Papua New Guinea, one of the world’s premier new gold-copper regions.
With 70 years in the industry, Harmony is an experienced emerging market gold miner and the largest gold producer in South Africa. We are also a significant operator of gold tailings retreatment facilities.
Headquartered in Randfontein, South Africa, Harmony has its primary listing on the Johannesburg Stock Exchange (HAR). It also has an American Depositary Receipt programme that is listed on the New York Stock Exchange (HMY).
At 30 June 2020, our market capitalisation was R43.3 billion (US$2.5 billion) (30 June 2019: R17.1 billion; US$1.2 billion).

OUR PURPOSE
To be a global, sustainable gold producer, with a large copper footprint, creating shared value for all stakeholders.

OUR MISSION
To create value by operating safely and sustainably and by growing our margins.

OUR IMPACT
At Harmony, we understand that our activities and the conduct of our business impacts the lives of the people we employ, the communities that surround our mines and the environment. This impact has economic and social implications for our stakeholders and for the countries in which we operate. In line with our purpose, we strive to ensure that, on balance, our contribution is positive and that, once mining ceases, our legacy is enduring.
SHAREHOLDERS
Our largest shareholder is African Rainbow Minerals Limited (ARM) which has a stake of 12.38% in Harmony. Our remaining shareholders are geographically diverse and include some of the largest fund managers globally. By far the largest shareholder base is in the United States (more than half), followed by South Africa.

WHERE WE OPERATE
South Africa
Production: ~1.1Moz (87%)

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Located on the Witwatersrand Basin and the Kraaipan Greenstone Belt, our South African operations accounted for 62% of group Mineral Resources (gold and gold equivalent ounces) and 48% of group Mineral Reserves at year end
UNDERGROUND
West Rand: Doornkop / Kusasalethu
Klerksdorp goldfield: Moab Khotsong
Free State*: Tshepong operations / Bambanani / Target 1 / Joel / Masimong
Surface
North West: Kalgold
Free State: Surface sources**
* Closure is currently underway at Unisel, where stoping activities are scaling down
** Includes the Tswelopele Beneficiation Operation (Proprietary) Limited in which Harmony has a holding of 75%

Papua New Guinea
Production:
~157 000oz (13%)
Located on the New Guinea Mobile Belt, in the Morobe Province, our Papua New Guinea operation accounted for 38% of group Mineral Resources (gold and gold equivalent ounces) and 52% of group Mineral Reserves at year end
Hidden Valley (open-pit gold and silver mine)
Wafi-Golpu (copper-gold joint operation - 50%)
Multiple exploration areas

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OUR VALUES
SAFETY
No matter the circumstances, safety is our main priority
ACCOUNTABLE
We are all accountable for delivering on our commitments
ACHIEVEMENT
Achievement is core to our success
CONNECTED
We are all connected as one team
HONESTY
We uphold honesty in all our business dealings and communicate openly with stakeholders

BUSINESS MODEL
HOW WE CREATE VALUE YEAR ON YEAR
INPUTS
Natural Capital
Manufactured Capital
The natural resources, such as our orebodies, water and energy, that are used in the functioning of the business
This pertains to the physical infrastructure or technology used by the company
- Mineral Reserve of 36.50Moz of gold and gold equivalents (FY19: 36.45Moz)
- Land under management
- Volume of ore milled 25.43Mt (FY19: 25.98Mt)
- Resources consumed:
- Water used for primary activities 19 692 000m3 (FY19: 23 158 000m3)
- Group electricity consumption 3 171 000 MWh (FY19: 3 340 677MWh)
See Mineral Resources and Reserves and Environmental management and stewardship for more information.
- Operational infrastructure, associated infrastructure and equipment
- Production costs R22.05 billion
(FY19: R20.32 billion)
- Mining rights and leases
- Exploration and growth projects
- Exploration spend, including Wafi-Golpu, R259 million (FY19: R498 million)

See Operational performance and Exploration and projects for more information.
 
 
Human Capital
Financial Capital
The skills and know-how of an organisation’s workforce
The traditional yardstick of performance, this capital includes funds obtained through financing or generated by means of productivity
- A total of 39 714 permanent and contract employees across the Group (FY19: 39 773)
- A transformation that endeavours to create a more gender diverse and racially representative workforce with a focus on recruiting from local communities
See Employee relations and Remuneration report for more information.
- Total equity R23.4 billion
(FY19: R22.6 billion)
- Placement of ordinary shares to raise equity capital of $200 million
- Cash generated by operating activities R4 723 million (FY19: R4 679 million)
See Financial director’s report for more information.
 
 

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Intellectual Capital
Social and Relationship Capital
This accounts for the intangibles associated with the brand and reputation, organisational systems and related procedures
This encompasses the relationships between the company and all its stakeholders
- The requisite skills and expertise required in being the global leader in deep-level gold mining
- Digitisation of the organisation is underway, including upgrades to enterprise resource planning and human resources systems
- Systems and processes
- Values and code of ethics guiding stakeholder engagement
- Governance and corporate responsibilities
- Stakeholders include: investors, employees, government and regulators, communities and suppliers
See Socio-economic development and ESG report for more information.

OPERATING CONTEXT


ACTIVITIES
Our activities are focused on mining gold from both mature deep-level and surface operations, processing ore and selling the product onto the market for further refinement. Additionally, we deliver on capital projects


OUR COMPETITIVE ADVANTAGE
Harmony is a world leader in surface and deep-level mature asset mining. We are uniquely skilled, and have extensive institutional knowledge, in prolonging the operating lives of mining assets. We are also well-versed in mutually beneficial stakeholder engagement and, thus, are able to thrive in emerging markets


OUR STRATEGY
To produce safe, profitable ounces and improve margins through responsible stewardship, operational excellence and effective capital allocation


SOCIAL LICENCE TO OPERATE
We prioritise stakeholder engagement and shared value creation so that we, at all times, maintain our social licence to operate


OUTLOOK
Harmony has been in operation for the past 70 years and it is our intention to extend our longevity by at least another 70 years by organically growing our mineral reserve base and pursuing value-accretive acquisitions

FACTORS IMPACTING OUR BUSINESS
What we can manage:
Safety
Grade and volume mined
Costs, efficiencies and productivity
Stakeholder relations
What is beyond our control:
Gold price and global market

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Exchange rate volatility
Regulatory policy and political uncertainty
Mounting community expectation and socio-economic challenges

OUTPUT
Gold produced
1.22Moz (FY19: 1.44Moz)

Revenue generated
R29.2 billion (FY19: R26.9 billion)

Total economic value distributed
R26.4 billion (FY19: R26.8 billion)

Total Co2 emissions
4 012 110t (FY19: 3 858 566t)

Mining waste generated
Total milled
25.5Mt (FY19: 26.0Mt)

Hazardous waste to landfill
250t (FY19: 399t)
OUTCOMES
Human capital
 
 
r
Tragically, there were six loss-of-life incidents
 
 
a
Recorded an overall improvement of 33.3% in the fatal injury frequency rate compared to FY19
 
 
a
A year of no strikes indicates a strong and mature relationship with the unions
 
 
a
Focus on gender diversity
 
 
a
A transformed workforce in South Africa, with 60% of management across all levels being HDPs
 
 
a
R11.7 billion (US$744 million) spent on wages and salaries
 
 
a
R458 million spent on skills training and human resource development (FY19: R484 million)
 
 
a
Rapid, proactive Covid-19 response and mitigation strategies
 
 
Financial capital
 
 
 
 
a
Our share price increased by 126% during FY20 positively influencing our market capitalisation, which closed at R43.3 billion on 30 June 2020
 
 
a
Net debt decreased to R1.36 billion (US$79 million) (FY19: R4.92 billion; US$348 million)
 
 
a
Production profit - R7.2 billion (US$459 million) (FY19: R6.6 billion; US$465 million)
 
 
Social and relationship capital
 
 
 
 
a
Invested R65 million and R36 million in South Africa and Papua New Guinea respectively, in our social licence to operate, which included mine community development initiatives
 
 
a
Focused on preferential/local procurement, spending R5.08 billion in South Africa and R1.25 billion in Papua New Guinea

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a
R342 million paid in taxes and royalties
 
 
a
Improved relationship with host community stakeholders
 
 
a
Hygiene products, food parcels and other essential supplies provided to the most vulnerable households in host communities
 
 
a
Constructive relations with the governments of South Africa and Papua New Guinea
 
 
Manufactured capital
 
 
a
Acquisition of Mponeng mine and Mine Waste Solutions (deal concluded post-year-end in September 2020)
 
 
a
Progressed our 30MW Nyala solar generation project to reduce our dependency on fossil fuel-generated electricity
 
 
Intellectual capital
 
 
a
A total of 31 533 employees completed training in FY20
 
 
a
Supported 84 bursaries at tertiary level
 
 
a
More digitised business equipped to operate effectively in the twenty-first century
 
 
Natural capital
 
 
a
The Group spent R161 million (US$10 million) (FY19: R199 million; US$14 million) on land rehabilitation initiatives and environmental stewardship
 
 
a
44.19ha was rehabilitated

DELIVERING ON OUR STRATEGY AND CAPITAL TRADE-OFFS

To produce safe, profitable ounces and improve margins through responsible stewardship, operational excellence and effective capital allocation

FOUR STRATEGIC PILLARS – PERFORMANCE AND OUTLOOK
 
FY20 – what we did
 
Outlook
ex15iar20deliver_image3.gif  Responsible stewardship
    Embed proactive safety culture
Improvement evident in safety performance – the fatal injury frequency rate improved by 33% (six fatalities versus 11 in FY19).
However, more remains to be done as the lost-time injury frequency rate regressed by 2.7% to 6.33 per million hours worked.
Our safety strategy is to instil a proactive safety culture
focused on:
    Leadership
    Risk management
    Prevention of repeat incidents
    Rewarding safe behaviour
    Zero tolerance for non-compliance with safety protocols
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To continue with implementation and embedding of our four-phase pro-active safety culture.
To achieve our objective of zero harm and zero loss of life incidents.
For more information on our safety performance, targets and outlook, see Safety and health

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    Manage the Covid-19 pandemic
    Measures to manage, contain and prevent the Covid-19 pandemic were aimed at ensuring a safe and risk-free workplace for employees. These measures were extended to host communities
    A standard operating procedure was speedily developed and implemented, supported by a focused communication campaign
    An employee messaging app was introduced to aid monitoring and communication
    Company facilities were made available for self-isolation and quarantine
    Community outreach projects were aimed at the most vulnerable in society
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For as long as the Covid-19 disease continues to pose a threat to our employees and host communities, we will continue with our preventative and mitigating measures to manage the pandemic.
For more information on what we have done to address the Covid-19 pandemic, see Safety and health and Socio-economic development
    Maintain strong stakeholder relations
For more information on stakeholder engagement, see Stakeholder engagement and material issues
Our response to the pandemic reinforced our commitment to the “S” in ESG. In addition to engaging with employees and unions, management of the pandemic involved collaborating and engaging with many other stakeholders including various levels of government, community representatives, industry bodies and our peers in the mining sector.
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We will continue to prioritise engagements with our various stakeholders to ensure we maintain healthy and robust relationships.
    Continue responsible
ESG practices
This encompasses our activities principally in relation to the environment, our host communities and the regulatory environment in which we operate. All our decisions and actions are governed by our corporate governance framework, code of ethics, values and the policies and frameworks in place.
Our third generation social and labour plan projects are well under way.
Environmental performance, climate change, land rehabilitation and water conservation remain focus areas.
We have adopted the Task Force for Climate-related Financial Disclosure (TCFD), and are now reporting in terms of its financial requirements/guidelines.
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Retaining our social licence to operate is crucial. As this hinges on responsible ESG practices, we will endeavour to ensure that our performance in this regard continues to strive
for excellence.
For more information on our ESG performance, see Socio-economic development, Environmental management and Corporate governance
 ex15iar20deliver_image7.gif  Operational excellence
    Continue operating:
o    safely
o    optimally
o    meeting/exceeding plans
 

Overall, Harmony demonstrated its expertise as a world leader in deep-level, mature asset mining `and re-affirmed its resilience to survive in times of social and economic uncertainty.
Regarding safety, see above – strategic pillar 1, Responsible stewardship and embedding a proactive safety culture.
Key features of our operational performance were:
    Better-than-expected operational performance in the fourth quarter of the year, despite the Covid-19 pandemic
    A 15% decline in annual gold production to 1.2Moz
    106% increase in operating free cash flow
In addition, exploration and several projects are underway which will contribute to our resource and reserve pipeline in the longer term. See below strategic pillar 4, Capital allocation.
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Planned group production for FY21 is estimated at:
    1.26Moz to 1.3Moz at an all-in sustaining cost of R690 000/kg to R710 000/kg
    Including Mponeng and Mine Waste Solutions, planned production is 1.6Moz
Completion of the acquisition of Mponeng and Mine Waste Solutions will further enhance production in the medium term contributing around 350 000oz annually.
For more information, see Operational performance in this report as well as the separate report, Operational performance 2020, for more detailed information by operation

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 ex15iar20deliver_image9.gif Cash certainty
    Preserve cash


A stronger gold price for the year – up 25% in terms of rands
and 14% in terms of US dollars – boosted free cash flow to
R3.6 billion which contributed to successful cash preservation, in turn providing greater balance sheet flexibility to support growth.
Additional liquidity was secured by precautionary drawdowns on rand and US dollar credit facilities as the Covid-19 pandemic was breaking out. These were subsequently repaid.
A successful US$200 million capital raise was concluded for the funding of the Mponeng and Mine Waste Solutions acquisition. The capital raise was 4.75 times oversubscribed.
All of this has contributed to creating balance sheet headroom of R7 billion – this will reduce to R4 billion once the acquisition has been concluded.
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We will continue to focus on maintaining a strong balance sheet and on optimising its flexibility.
For more information, see the Financial director’s report
    Reduce costs
Costs were under pressure for most of the year with the group all-in sustaining cost increasing by 18% in terms of rands to
R651 356/kg (7% increase in US dollars to US$1 293/oz).
The national lockdown in South Africa resulted in fewer gold ounces being produced, which impacted overall costs for the year. Labour and electricity cost inflation further exacerbated the all-in sustaining cost recorded for the year.
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Higher production translates to lower costs – if we achieve our production targets, costs will be contained. We will also focus on advancing projects that will improve our energy supply and substantially reduce costs. We are in year three of a three-year wage agreement. Labour costs currently account for 60% of total operating costs.
For more information, see the Financial director’s report
    Reduce debt
Net debt levels reduced significantly during FY20.
At 30 June 2020:
    Net debt was R1.36bn (or US$79 million) – if the capital raise is excluded, net debt at year end, totalled R4.83 billion
(or US$279 million)
    Net debt to EBITDA was 0.2x, compared to 0.8x at
31 March 2020. Excluding the capital raise, net debt to EBITDA was 0.8x
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Maintain our net debt to EBITDA ratio at below 1x.
For more information, see the Financial director’s report
    Adapt to gold price fluctuations
The derivative programmes currently in place began in FY16 and are aimed at reducing our risks and to capitalise on prevailing high gold prices. Over the five years since inception, they have realised a net gain of R2.3 billion.
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Certain hedge transactions were rolled forwards to March 2021.
We have maintained a hedging limit of 20% of two years’ gold production to lock in the current high price for future production.
Up to 25% of our foreign exchange may be hedged.
For more information, see the Financial director’s report
ex15iar20delive_image14.gif Effective capital allocation
    Develop pipeline of organic projects
Clear targets inform our capital allocation decisions, including among other, an internal rate of return of more than 15% and a debt repayment level of less than 1x net debt:EBITDA.
Our pipeline of organic growth projects is aimed at addressing the ore reserve replacement risk and ensuring future growth. The projects range from the concept/exploration stage through feasibility to the permitting stage. In all, capital expenditure of R259 million (US$17 million) was invested in exploration and project development in FY20.
Of the projects underway, the most advanced is the Wafi-Golpu joint venture project which is awaiting approval and finalisation of the required permits.
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Capital expenditure of
R279 million (US$20 million) is forecast for investment in exploration and project development in FY21.
A principal aim is to progress
the permitting for Wafi-Golpu
and to proceed with its development.
For more information, see also Exploration and projects

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    Integrate Mponeng and Mine Waste Solutions
The transaction to acquire these assets was concluded on
30 September with their acquisition effective from
1 October 2020.
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Following the conclusion of this transaction, the focus in FY21 will be to ensure their smooth integration within Harmony. The organisational management structures are in place in readiness. These operations are expected to make an immediate contribution to production and to operating cash flows from
1 October 2020.
For further detail, see Chief executive officer’ review
    Returns
Each of our capital allocations decisions are aimed at ensuring total shareholder return - both share appreciation and dividends. The decision to pay a dividend is based on the company’s operational and financial performance, as well as the strategic direction being pursued. Dividends are paid from profits only. The company is currently in a growth phase and our priority remains to first repay our debt.
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At current gold price levels it is likely that we will repay our debt in the next 12 to 18 months.
Legend:
ex15iar20delive_image16.gifAchieved    ex15iar20delive_image18.gifMaking progress    ex15iar20delive_image19.gifWork remains to be done
UNDERSTANDING OUR STRATEGIC CAPITAL TRADE-OFFS
Our underlying business strategy aims to efficiently convert our natural capital into value across the remaining five capitals. However, creating and optimising that value inevitably requires trade-offs in how and when value is created, transformed or depleted across the various capitals. The following are some of the major trade-offs considered in terms of our strategic pillars in FY20.
Strategic pillar
Capitals increased/enhanced
Capitals depleted
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RESPONSIBLE STEWARDSHIP
Being mindful of and managing and limiting the impacts of our activities on employees, host communities and the environment
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HUMAN CAPITAL
Acted on our duty of care in terms of employee safety and health
 ex15iar20delive_image22.gif  
NATURAL CAPITAL
Mitigated and managed the environmental impact of our activities
 ex15iar20delive_image23.gif
SOCIAL AND RELATIONSHIP CAPITAL
Engaged with stakeholders, investing in communities, paying taxes and royalties, and regulatory compliance
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FINANCIAL CAPITAL
Costs incurred in carrying out our stewardship responsibilities – for employee healthcare expenditure and to manage Covid-19 in particular, and on environmental management, among others
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OPERATIONAL EXCELLENCE 
Prioritising safety, strict cost control, management of grade mined, together with disciplined mining, to improve productivity and efficiencies
 ex15iar20delive_image26.gif
HUMAN CAPITAL 
Invested in employees in terms of safety, skills development
and training
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INTELLECTUAL CAPITAL
Invested in technology upgrades, and in system and process improvements to optimise and increase efficiencies and productivity
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MANUFACTURED CAPITAL
Invested in the maintenance of mining infrastructure (plant, machinery and equipment) and to sustain the business
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FINANCIAL CAPITAL
Financial expenditure incurred to promote operational excellence and to deliver on our strategic pillar of ‘Cash certainty’

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 ex15iar20delive_image29.gif
CASH CERTAINTY 
Ensuring cash flow certainty by delivering on operational plans, supported by current hedging strategy
 ex15iar20delive_image24.gif
FINANCIAL CAPITAL
The aim of this strategic pillar is to enhance financial capital – to preserve cash and to reduce costs and debt
 
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EFFECTIVE CAPITAL ALLOCATION
Evaluating and prioritising organic growth opportunities and safe, value-accretive acquisitions to generate positive stakeholder returns and increase margins
Investing in the future
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MANUFACTURED CAPITAL
Acquired infrastructure and assets (Mponeng and Mine Waste Solutions)
ex15iar20delive_image22.gif  
NATURAL CAPITAL
    Developing a project pipeline to ensure availability of Ore Reserves to be mined
    Acquired resources and reserves (Mponeng and Mine Waste Solutions)
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FINANCIAL CAPITAL
In the longer term, these acquisitions and projects will contribute positively to operational cash flows and margins
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FINANCIAL CAPITAL
The total cost of the acquisitions, the debt incurred and of project development is balanced against the longer-term financial benefits
OUR LEADERSHIP
BOARD OF DIRECTORS
The Harmony board of directors has overall accountability for guiding the strategic direction of the company, for ensuring an ethical culture and responsible corporate citizenship and for effective control and legitimacy. It is a unitary board comprising 15 members, nine of whom are independent, and five of whom are women.

COMMITTEE
Audit and risk committee
Remuneration committee
Social and ethics committee
Investment committee
Nomination committee
Technical committee
BOARD LEADERSHIP
Non-executive chairman
Dr Patrice Motsepe (58)
BA, LLB, Doctorate of Commerce (Honorius Causa), Doctor of Management and Commerce (Honorius Causa)

Appointed non-independent non-executive chairman on 23 September 2003

Member: Nomination committee
Non-executive deputy chairman
Modise Motloba (54)
BSc, Diploma in Strategic Management


Appointed 30 July 2004
Chairperson: Investment committee

Member: Nomination committee, Technical committee, Social and ethics committee
Lead independent non-executive director
Mavuso Msimang (79)
MBA (Project Management), BSc

Appointed 26 March 2011

Chairman: Nomination committee
  
Member: Social and ethics committee

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Executive directors
Chief executive officer

Peter Steenkamp (60)

BEng (Mining), Mine Manager’s Certificate Metal Mines, Mine Manager’s Certificate Fiery Mines, CPIR, MDP, BLDP

Appointed chief executive officer on 1 January 2016
Financial director

Boipelo Lekubo (37)

BCom (Hons), CA(SA)

Joined Harmony in June 2017 and appointed financial director on 3 March 2020
Executive director: stakeholder relations and corporate affairs

Mashego Mashego (56)

BA (Education), BA (Hons)
(Human Resources Management), Joint Management Development Programme, Global Executive Development Programme

Joined Harmony in 2005 and appointed an executive director on 24 February 2010

Independent non-executive directors
Joaquim Chissano (81)
PhD (Honorius Causa)

Appointed 20 April 2005

Member: Investment committee, Social and ethics committee, Nomination committee
Fikile De Buck (60)
BA (Economics), FCCA

Appointed 30 March 2006

Chairperson: Audit and risk committee
 
Member: Nomination committee, Social and ethics committee, Remuneration committee
Dr Simo Lushaba (54)
BSc (Hons), MBA, DBA, CD (SA)

Appointed 18 October 2002

Chairperson: Social and ethics committee

Member: Investment committee, Remuneration committee, Audit and risk committee
Grathel Motau (46)
BCompt, BCompt Hon, CA(SA),
Mphil (Development Finance)

Appointed 13 May 2019

Member: Investment committee
Karabo Nondumo (42)
BAcc, HDip (Acc), CA(SA)

Appointed 3 May 2013

Member: Technical committee, Investment committee, Audit and risk committee
Vishnu Pillay (63)
BSc (Hon), MSc

Appointed 8 May 2013

Chairperson: Remuneration committee

Member: Nomination committee, Technical committee, Investment committee

Given Sibiya (52)
BComm, BAcc, CA(SA)

Appointed 13 May 2019

Member: Audit and risk committee

John Wetton (71)
CA(SA), FCA

Appointed 1 July 2011

Member: Investment committee, Social and ethics committee, Remuneration committee, Audit and risk committee
 

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Non-executive director
André Wilkens (71)
Mine Manager’s Certificate of Competency, MDPA, RMIIA, Mini MBA Oil and Gas

Appointed 7 August 2007


Chairperson: Technical committee


Member: Remuneration committee, Social committee

Full and detailed resumés of all members of Harmony’s board of directors are available at https://www.harmony.co.za/who-we-are/board

EXECUTIVE MANAGEMENT

Harmony’s executive management team comprises the chief executive officer, the financial director and one additional executive director (see page 22), who, together with four senior group executives, all sit on the group executive committee. This committee is supported by four corporate executives, who make up the group chief executive’s office and who report to either the chief executive officer or the financial director.
There are in addition regional executive committees in place - one for South Africa and one for Papua New Guinea (South-East Asia).
Full and detailed resumés of all members of Harmony’s executive management are available at https://www.harmony.co.za/who-we-are/executive

SENIOR GROUP EXECUTIVES
Chief operating officer: South Africa
Beyers Nel (43)

BEng (Mining Engineering), MBA, Pr. Eng, Mine Manager’s Certificate of Competency
Chief executive officer: South-East Asia
Johannes van Heerden (48)

BCompt (Hons), CA(SA)
Chief operating officer: new business development, corporate strategy and projects
Phillip Tobias (50)

BSc (Mining Engineering), International Executive Development Programme, Advanced Management Programme, Pr Eng and Mine Manager’s Certificate of Competence
Enterprise risk and investor relations
Marian van der Walt (47) 

MBA (Oxford), BCom (Law), LLB, Higher Diploma in Tax, Diplomas in Corporate Governance and Insolvency Law, Certificates in Business Leadership and Investor Relations (UK)

Appointed a senior executive on 14 August 2020

CORPORATE EXECUTIVES: Reporting to the group chief executive’s office
Chief audit executive
Besky Maluleka-Ngunjiri (44)

BCompt (Hons), CTA, CIA, CCSA
Sustainable development
Melanie Naidoo-Vermaak (46)

BSc (Hons) (Industrial Microbiology), MSc (Sustainable Development), MBA
Chief financial officer: Treasury
Herman Perry (48) 

BCom (Hons), CA(SA)
Special projects
Abré van Vuuren (60)
BCom, Development Programme in Labour Relations, Management Development Programme, Advanced Labour Law Programme, Board Leadership Programme

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GROUP COMPANY SECRETARY
Shela Mohatla (35)

FCIS (CGISA), BAdmin IR, PGDIP Corporate Law, PGDIP General Management, Certificate in Management Development (PMD)


REGIONAL EXECUTIVE COMMITTEES
Beyers Nel
Chief operating officer: South Africa

Jaco Boshoff
Ore reserve management

Anton Buthelezi
Human resources

Robert Hart
Technical services and engineering

Dr Tumi Legobye 
Health

Danie Muller
Chief financial officer (South Africa)

Tom van den Berg
Safety and technology

Regional managers
Francois Janse van Rensburg
Free State operations

Moses Motlhageng
Mponeng, Kusasalethu and Kalgold

Zweli Ndese
Moab Khotsong and Doornkop
Johannes van Heerden
Chief executive officer: South-East Asia

Bryan Baillie
Projects

Stan Bierschenk 
Engineering and asset management

Gary Davies 
Papua New Guinea operations

Mike Humphries 
Exploration

Greg Job 
New business and technical services

Aubrey Testa 
Chief financial officer (South-East Asia)

Richard Wills 
Corporate Affairs

Kepas Wali
Stakeholder relations and corporate affairs
Papua New Guinea


CHAIRMAN'S VISION
DEAR SHAREHOLDER AND STAKEHOLDERS
The Covid-19 pandemic significantly affected Harmony’s operations, gold production and employees in the last quarter of the financial year to June 2020 (FY20), following the South African government’s imposed temporary closures on underground mines as part of the nation-wide lockdown.
Harmony has successfully contained the spread of the virus throughout its operations in collaboration with the Department of Mineral Resources and Energy, labour unions, the Minerals Council South Africa and our employees. All our employees are now back at work and we have resumed full production.

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The impact of the pandemic reduced gold production by 11% compared to the previous year, resulting in a loss in revenue of approximately R4 billion (US$255 million), turning a potential profit of more than R3 billion (US$192 million) to a net loss for the period of R850 million (US$54 million).
Despite these challenges, Harmony delivered on the strategic growth objectives set in FY16, which are, inter alia, to:
increase production to around 1.5Moz per year
add quality ounces to reduce all-in sustaining costs
The acquisition of Mponeng and Mine Waste Solutions from AngloGold Ashanti Limited (AngloGold Ashanti) will increase our production by 350 000 ounces a year to more than 1.5Moz and improve our profit margins. We thank our shareholders for participating in the equity capital raise of US$200 million in June 2020 to fund the acquisition of these assets.
We recorded a remarkable increase in our share price, which was 126% higher year on year by end June 2020, resulting in a market capitalisation of R43.3 billion (US$2.5 billion). Harmony was also included in the FTSE-JSE Africa Top 40 in September 2020.
Gold continues to be viewed as a safe-haven investment. We remain positive on the outlook for gold in the prevailing uncertain and volatile macro environment. We believe this rising trend will continue. For Harmony, this comes at an opportune time as we assume ownership of the Mponeng and Mine Waste Solutions assets from AngloGold Ashanti.
We remain committed to organic and acquisitive growth. Harmony will continue to focus on securing the renewal of Hidden Valley’s mining licence and the special mining lease for the Wafi-Golpu joint venture in Papua New Guinea.

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Maintaining a safe and healthy work environment
The safety and health of all our employees is our primary responsibility. We are committed to ensuring that the work environment is safe and that every employee goes home, every day, in a healthy condition. Regrettably, six employees died during the year in work-related incidents. We extend our sincere condolences to their families, friends and colleagues. The proactive behavioural safety journey we embarked upon in 2016 to improve the culture of safety continues to be our key strategic imperative.
Investing in our employees
We provide work for approximately 40 000 employees. Most of our employees reside in communities surrounding our operations and our relationships with our employees and their representative trade unions are good and constructive.

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Despite the increased demands of Covid-19, we continued to allocate resources for the health and well-being of our employees and invested approximately R458 million (US$29 million) in employee training, development and career advancement.
Harmony’s commitment to its host communities
We recognise that the improvement in the living conditions of our host communities is vital to the stability and sustainability of our business. Our local community development projects include recent land donations in the Free State and the restoration of provincial roads in Welkom and Virginia.
The pandemic created a new range of challenges for our host communities, particularly for those communities most in need. We focused on providing Covid-19 public awareness campaigns, many of which were extensions of awareness campaigns directed at our employees. We also provided food, hygiene products and funded income-generating projects such as the manufacture of masks.
In FY20, we invested R112 million (US$7 million) in community development and upliftment projects, and corporate social investment. In addition to allocating resources which were focused on Covid-19, we concentrated on providing infrastructure and supporting enterprise development for small, medium and micro businesses.
In both South Africa and Papua New Guinea, we supported agricultural projects which were led by women and the youth. In the past two years, R49 million (US$3 million) was invested in agricultural projects in our host communities in South Africa. Of this, R8 million (US$520 000) was spent in the reporting year.
Harmony pays significant taxes and royalties in the countries where we operate, with total contributions of about R248 million (US$16 million) in South Africa and about R94 million (US$6 million) in Papua New Guinea in FY20. We also paid R11.7 billion (US$744 million) in wages and salaries, and spent R14.2 billion (US$907 million) on local procurement.
For more information about our socio-economic development initiatives, see Socio-economic development - uplifting communities.
The South African gold-mining industry
In calendar year 2019, the South African industry employed 95 130 people and paid R24.3 billion (US$1.7 billion) in wages, salaries and employee benefits. With total gold sales of R72.6 billion (US$5.0 billion), the industry contributed R361 billion (US$25 billion) to the country’s gross domestic product (GDP).
Harmony was established approximately 70 years ago and continues its strategy in South Africa of acquiring mature mines, extending their lives, saving jobs and creating sustainable value. This is a very important and essential role in uplifting and improving the living conditions and standard of living of many South Africans.
Our commitment to the environment and its resources
In FY20, Harmony continued to apply global good practice in managing our scarce natural resources with initiatives recognised by global agencies.
Climate change is one of the most critical global challenges of our time and will have a lasting impact on businesses, communities and the world. We are committed to continue participating in the global response to reduce carbon emissions and mitigate the physical impacts of climate change.
Reducing our carbon footprint remains an important focus. In South Africa, we are well advanced in our efforts to seek augmenting national grid power with renewable alternatives.

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We have made good progress in reducing the volumes of potable water used in our processing systems by substituting this with treated grey water and improving the efficiency of our recycling circuits. Containing dust from tailings dams continues to be addressed through ongoing vegetation and mining land is being rehabilitated for redevelopment.
For more on our environmental management activities, see Environmental management and stewardship.
Commitment to good governance
Our board formulates robust governance standards and ensures that these are enforced in order to conduct our business ethically and in line with good global practice.
The range and depth of expertise on Harmony’s board has been invaluable as we navigate the unprecedented Covid-19 pandemic and the current social, political, economic and environmental challenges.
During the year under review, we appointed Ms Boipelo Lekubo to the board as our financial director, succeeding Mr Frank Abbott. I welcome Boipelo to the board and would like to express our gratitude to Frank Abbott for the outstanding leadership he provided as our finance director.
On 30 September 2020, we announced the resignations of Mr Ken Dicks and Mr Max Sisulu as independent non-executive directors. We thank Max and Ken for their contribution during their tenure and wish them all of the best.
For further details, refer to the corporate governance review in this report.
My gratitude
It has been a particularly demanding year in the face of Covid-19. It is a credit to our employees that they have adapted very well to the unusual Covid-19 challenges and its impact on their work environment.
My deep gratitude goes to our employees, our host communities, our shareholders and all other stakeholders for their support and cooperation over the past financial year.
I would also thank our chief executive officer, Peter Steenkamp, and his management team for their leadership, hard work and contribution to the success and growth of Harmony.
Dr Patrice Motsepe
Chairman
23 October 2020


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CHIEF EXECUTIVE'S REVIEW

At Harmony, we were well prepared to deal with the challenges of Covid-19 by the time South Africa declared a national state of disaster on 15 March 2020, and ahead of the state of emergency declared on 14 April 2020 in Papua New Guinea.
Our surface operations in South Africa and Hidden Valley in Papua New Guinea were able to continue operating during the restrictions. By having the necessary precautionary measures in place, we were able to recall our employees smoothly as restrictions were lifted. As a result, the fourth quarter’s performance was better than we had initially anticipated. By the end of August 2020, all our employees, including those from outside South Africa, were back at work and production was restored to 100%.
We were also able to raise, by way of an equity offer, US$200 million in part-settlement of the acquisition of the Mponeng and Mine Waste Solutions assets from AngloGold Ashanti. The gold price, which rose 25% in rand terms and 14% in US dollar terms in FY20, provided strong support through these difficult times.
SAFETY AND HEALTH
We continued applying our safety strategy throughout the year with a pleasing improvement in our fatal injury frequency rate from 0.12 to 0.08 per million hours worked. Our South African underground operations recorded 3 million fatality-free shifts; Hidden Valley, Moab Khotsong, Harmony One plant and Free State operations all recorded 2 million each; and Target 1, Tshepong operations, Joel and the Free State plants, 1 million each.
Our Covid-19 standard operating procedures were informed by guidelines from local government authorities and global organisations, particularly the World Health Organization. We also consulted with relevant government departments and organised labour. We had essential preventative measures in place before lockdown. Our objective at the outset was to protect our people from the pandemic as they returned to work.
Tragically, six colleagues died in work-related incidents during FY20: Siyabonga Ntika (rock-drill operator), John Thabang Mamogale (metallurgical assistant), Elphas Nkosi (supervisor), Tshepang Lebajoa (locomotive operator), Sibusiso Mngomezulu (winch operator) and Papa Ernest Dael (development team member). We extend our heartfelt condolences to their families, friends and colleagues.
We will continue the safety journey we began in 2016, with focus on leadership, risk management, attaining a proactive safety culture, adopting measures to prevent repeat incidents, rewarding safe behaviour and zero tolerance for non-compliance.
For additional information, see Safety and health.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) PERFORMANCE
Harmony’s ESG achievements in FY20 were recognised by various ratings organisations. In the FTSE4Good Index, we outperformed both the gold and basic materials sectors on four ratings - ESG overall, environment, social and governance. We retained our position in the Bloomberg Gender-Equality Index and, in the MSCI Emerging Markets Index, we improved our rating from CCC to B. In the Carbon Disclosure Project (CDP) ratings, we achieved A for climate change and B for water.
Our total spend on environmental management and stewardship in FY20 was R159 million (US$10 million) - R126 million (US$8 million) in South Africa and R33 million (US$2 million) in Papua New Guinea. Our total social spend (local economic development plus corporate social investment) for the year was R112 million (US$7 million) - R76 million (US$5 million) in South Africa and R36 million (US$2 million) in Papua New Guinea.

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For additional information, see Stakeholder engagement and material issues, Environmental management and stewardship and Socio-economic development - uplifting communities.
OPERATIONAL REVIEW
South African operations
Total gold production from the South African operations of 32 991 kilograms (1.06Moz) was 15% lower than FY19, mainly due to the Covid-19 lockdown. In the first half of FY20, our operations performed well against their plans, except for Kusasalethu. Production in the second half was disrupted by reduced electricity supply and the Covid-19 lockdown. The underground operations recorded in the fourth quarter of FY20 of 5.72g/t, was well above our revised grade guidance for FY20 of 5.50 to 5.57g/t.
Papua New Guinea
Gold production for the year was 22% lower at 4 872 kilograms (156 639oz). Production at our Hidden Valley operation continued to be affected by the planned move from stage 5 to stage 6 mining in the pit during the year. The mine imposed its own site-lockdown for several weeks from the onset of the pandemic but was able to maintain production at a reduced rate.
GROWTH
The acquisition of Mponeng and Mine Waste Solutions was concluded in September 2020 and we assumed operational control of both from 1 October 2020. This acquisition reaffirms our belief in the sustainability of gold and operating in South Africa.
These assets - similar to Moab Khotsong acquired two years ago - will be integrated into the Harmony family. With approximately 350 000 ounces immediately added to our annual production, we will further evaluate unlocking any surface synergies with our existing assets.
We have resumed our capital projects - including Target North drilling, exploration at Kalgold, the Tshepong and Joel decline projects and the Great Noligwa shaft pillar. These were halted at the onset of the pandemic as one of the measures to protect our balance sheet.
In Papua New Guinea, we have applied to the Mineral Resources Authority to extend Hidden Valley’s mining lease - which expires in 2025 - by a further five years. The Wafi-Golpu project is a game-changer for Harmony, both in terms of replacing ounces and increasing margins. Together with our joint-venture partner, Newcrest Mining Limited, we remain committed to progressing negotiations on a special mining lease for Wafi-Golpu. We are therefore encouraged by recent statements from the prime minister of Papua New Guinea that the project is a national priority to be urgently advanced.
OUR PEOPLE
The wellness, commitment, skill and expertise of our employees form the basis of the success and growth of our economy. This proved even more true in a most challenging year. With stable employee relations and supportive representative unions, we were able to maintain our focus on development, training and providing opportunities, despite the distractions and demands associated with Covid-19. More than ever, our relationships with our stakeholders were strengthened during the year.
LOOKING AHEAD
In FY21, we will pursue our strategy to produce safe, profitable ounces and improve margins. We look forward to bringing to account additional production from our new assets and will provide updated guidance for the year once we have completed their integration.

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CONCLUSION
In what proved to be the most extraordinary of years, I am most grateful for the continued support of Harmony’s board, executives and employees, our shareholders, trade unions, regulators and communities. With hope, resilience and strength, I am confident Harmony is prepared for FY21.
Peter Steenkamp
Chief executive officer
23 October 2020



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OUR BUSINESS CONTEXT
OUR EXTERNAL OPERATING ENVIRONMENT

Our external operating environment is influenced by continual economic, social, political and environmental pressures both at a macro-economic and national level, which can change over the short, medium or long term. It is therefore vital for Harmony’s success and sustainability that we identify and understand all external influences that impact on our business.
GLOBAL MACRO-ENVIRONMENT
 
Factor
What happened
Our response
Economic and
geo-politics
Gold price
A combination of factors converged to spur an exceptional price rally during the period under review. These included the global stock market crash in the wake of the rapid spread of the Covid-19 virus, a significant contraction of the world economy, an overhaul of monetary and fiscal policies, a weaker dollar, and continued global geopolitical risk. The gold price rose from $1 404/oz at the start of FY20 to $1 776/oz at the close of the financial year. Post-year end, the gold price continued its phenomenal trajectory and rallied to an all-time high of $2 038/oz on 3 August 2020.
Apart from the 20% of our production that is hedged - a strategy that was embarked upon in 2016 - we do not determine the gold price. However, we use three-year price assumption models to determine which gold price we will use for planning purposes.
 
 
See Chairman’s vision, Chief executive officer’s review and Financial director’s report
 
Gold market
Global demand for the commodity continued to be robust. The market was particularly driven by strong demand for jewellery in the second half of 2019 and demand for gold-backed exchange-traded funds in the first half of 2020 as investors scrambled for a safe haven amidst global socio-economic-political uncertainties.
The market was also significantly impacted by the disruption to the gold supply chain, particularly in terms of the production, refining and delivery of gold as the pandemic gained in severity.
The national lockdowns associated with the Covid-19 pandemic prevented us from haracteri production to meet the increased demand, particularly in the fourth quarter of the year under review. But Harmony remains focused on overcoming any remaining operational challenges to take maximum advantage of the robust demand.
 
 
See Chairman’s vision, Chief executive officer’s review and Financial director’s report
 
Geo-political uncertainties
Both the price of and market for gold are driven by the state of the global geo-political environment. The period under review was characterised by heightened geo-political uncertainty, driven principally by rising tensions between the United States and China, the decoupling of the US-Chinese technology sector, continued tensions in the Middle East, unrest in Hong Kong, and the de-secularisation.




See Chairman’s vision, Chief executive officer’s review and Financial director’s report
Health
Covid-19
The rapid spread of Covid-19, a highly-contagious severe acute respiratory syndrome, wreaked economic and social havoc across the entire world from the start of 2020. And, until a vaccine is found, Covid-19 is likely to remain a significant influencing factor determining the world’s economic-socio-political trajectory.
Within 13 days of the first official case of Covid-19 being reported in South Africa, the company announced, on 18 March, that it was implementing a Covid-19 risk management strategy. The aim of this was, and remains, to identify, evaluate and rank the hazards associated with any exposures to Covid-19 and potential infections. It also aims to reduce the probability of an employee contracting Covid-19 and to limit the severity should they be infected.
See Safety and health

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Factor
What happened
Our response
Socio-cultural
Shareholder activism
Shareholders and investors the world over expect far more from companies than a decade ago. There is increasing pressure on mining companies to not only demonstrate that they can responsibly allocate and manage capital but, more importantly, that they prove a solid commitment to dealing with ESG issues.
Responsible stewardship is one of our strategic pillars. To meet shareholder expectations, we focus on continuously improving our ESG performance, while aligning our corporate targets with the UN SDGs and other guidelines, where relevant.
See Stakeholder engagement and material issues
Environmental
Climate change
Climate change is increasingly putting governments, investors, and society at large on a collision course with corporate decision-makers, who must choose between ambitious commitments to reduce their emissions and their bottom lines. There is a growing trend by civil society of being unforgiving of investors and companies they believe to be moving too slowly towards a carbon neutral future. Moreover, investors are reducing exposures to carbon intensive industries. All this as global warming makes natural disasters more likely, more frequent, and more severe.
To keep our impact to a minimum, we are committed to reduce our carbon emissions as much as feasibly possible, comply with all environmental legislation, manage our resources efficiently, minimise waste streams, and implement best practices as far as land management and rehabilitation is concerned.


See Environmental stewardship

Regional specific factors
 
Factor
What happened
Our response
Economic
Exchange rate



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The rand depreciated considerably relative to the US dollar, during the year under review. This served to further boost the advantage of the gold price rally and the rand gold price exceeded R1 million/kg for the first time in the country’s history.
The Covid-related national lockdowns inhibited us from maximising production to take full advantage of the exchange rate. We remain, however, committed to overcoming any remaining operational challenges to take maximum advantage of the robust demand.
 
 
 
See Financial director’s report
 
Sovereign rating



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South Africa’s sovereign rating was further downgraded in early 2020, thereby negatively impacting the cost of and access to capital.
We regularly engage with investors to provide a realistic understanding of our potential operating and financial performance.
 
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Similarly, Papua New Guinea’s long-term foreign and local currency sovereign credit rating was also downgraded in early 2020 on the back of mounting debt and fiscal deficits.
See Financial director’s report
Socio-cultural
Social licence to operate


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The nature of the extractive sector means that mining companies must pay particular attention to their social licence to operate. This is an ‘unspoken’ acceptance and approval by local communities and other stakeholders to operate a project. To ensure a social licence to operate, companies must navigate complex social, economic and political dynamics over time to avoid conflicts with their host communities.
Communities have expectations of economic benefits - employment and procurement opportunities, and the provision of infrastructure, health care and education.
We take our role as a responsible corporate citizen seriously and continuously strive to preserve our social licence to operate. We constructively engage with stakeholders to share value, better understand and manage expectations, and to secure and maintain our social licence to operate.
 
See Socio-economic development - uplifting communities

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Factor
What happened
Our response
 
Potential liability for occupational lung disease compensation



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On 21 December 2012, a class action suit was brought against 32 South African gold mining companies on behalf of 69 former gold miners - themselves representative of a far larger number of miners - suffering from silicosis.
The ongoing litigation represented a substantial financial and reputational liability for the gold mining companies.
Harmony was central to the negotiations that resulted in a R5.2 billion settlement that was approved by the Johannesburg High Court on 26 July 2019. Harmony was also instrumental in the establishment of a trust to carry out the terms of the settlement agreement and to manage the compensation process.
 
See Safety and health
Political / regulatory
Political / regulatory / legal environment



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Papua New Guinea’s legislative and regulatory environment is undergoing a profound transformation, driven by the ‘take back Papua New Guinea’ agenda of recently-elected Prime Minister James Marape.
In both jurisdictions, we strive to constructively engage with government directly, or through industry lobby representatives, to find amicable solutions to the concerns of both parties.
 
There are several new bills and amendment bills and new draft policies before parliament, which have been delayed owing to the onset of the Covid-19 global pandemic. This has prolonged regulatory uncertainty, particularly in terms of the regulated management and reporting of environmental impacts in and surrounding mining operations.
See Chairman’s vision, Chief executive officer’s review, Exploration and projects

Environmental
Water shortage



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Water availability is becoming less predictable, with South Africa experiencing intense drought periods recently.
We strive to manage and mitigate our impacts on water catchment areas by ensuring that we do not denude the quality or reduce the volume of water in areas around our operations.
 
See Environmental management and stewardship
Technical
Electricity



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Not only is the price of electricity expensive, continued intermittent load shedding makes the supply unreliable.
Harmony is exploring renewable energy options which will greatly assist in reducing dependency on Eskom.
 
See Environmental management and stewardship

OUR RISKS AND OPPORTUNITIES

The nature of our operations, together with factors and events in the external environment within which we operate, expose our business to risks and opportunities that can impact on the delivery on strategic objectives and the ability to generate sustainable value for shareholders and other stakeholders.
We have systems and processes in place to carefully evaluate, manage and mitigate these risks proactively and to realise opportunities. Effective governance and active management are fundamental to these processes and systems.
By understanding those factors in our internal and external operating environments that create uncertainty and risk as well as their inter-related dynamics, we are better able to manage the effects of such risks and to position Harmony to take advantage of any opportunities, future challenges and growth prospects. See Our external operating environment for more information.

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Over our 70 years in operation, we have developed expertise in operating in emerging economies and experience in managing the socio-political challenges in these countries. We have developed the skills to navigate the challenges of multi-stakeholder labour relations, especially at our deep-level gold mines in South Africa, which are labour intensive and unionised.
OUR ENTERPRISE RISK MANAGEMENT PROCESS
At Harmony, our approach to risk management relies on the continuous monitoring of risk and related mitigation procedures and, when appropriate, their revision. These activities are embedded in our day-to-day activities and processes at an operational level, and in our governance structures at a group policy level.
Risk management has, as its starting point, our business strategy and related strategic objectives, and similarly for opportunities. Identifying and understanding those factors that have the potential to limit our ability to deliver on our strategy is vital – and conversely for those factors that present opportunities – will enable us to achieve our goals.
In the past year, our risk management team focused on progressively evolving from being simply risk competent to becoming risk intelligent, enabling us to make risk-based decisions. We are currently in the final stages of developing our new enterprise risk management and resilience policy, risk management guidelines and standards, and a new risk management framework to improve the effectiveness of risk management throughout Harmony. This entails a more holistic and forward-looking approach to the management of risk and uncertainty.

Risk management process
OVERSIGHT OF RISK
GOVERNANCE PROCESS
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EXECUTIVE MANAGEMENT
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IMPLEMENTATION AND
DAY-TO-DAY MANAGEMENT
Board
Top strategic, operational and safety-specific risks and mitigating factors
are reported quarterly to the board
by committees
 
Conducts quarterly reviews of Harmony’s strategic risk profile to:
    assess its completeness
    consider those external and internal factors which could lead to any new/emerging risks and opportunities
    revisit the likelihood and impact/ consequence of existing risks and to similarly assess any new or emerging risks and opportunities to determine a residual rating for each
    review the completeness, effectiveness and/or relevance of mitigating actions implemented and to evaluate the resulting residual risk ranking
 
Operational management teams
Implement and oversee day-to-day
risk management
Audit and risk committee
Responsible for oversight of risk governance and ensuring that strategic risks are appropriately addressed and managed. Reviews and evaluates related policies, systems and processes in place to identify, monitor and manage risk, including our risk management policy, methodology and planning, formal risk assessment, internal controls and assurance processes, our risk appetite and tolerance, and our responses to the risks identified
 
Safety
A four-layered risk-based approach to actively manage safety adopted in both South Africa and Papua New Guinea – for further information on this risk-based approach to safety, see Safety and health in this report
Technical committee
Monitors safety and operation- 
specific risks
 
Operations
Each operation maintains, updates
and regularly reviews its risk register. These operational risk registers are formally reviewed weekly by the regional general managers together with country-based executive and
management teams
Other board committees
Review specific risks falling within the ambit of their responsibilities
 

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HARMONY'S RISK MANAGEMENT STRATEGY
Mining is a business laden with risks, both from an operational and external operating environment perspective. Only by being fully aware and understanding all these risks and implementing mitigating initiatives can a mining business be both successful and sustainable. It is in this context that, in 2018, we adopted the Harmony risk management strategy, the ultimate objective of which is to achieve safe, profitable production at all our operations in South Africa and Papua New Guinea.
This risk management strategy is also intended to embed a culture of risk awareness and mitigation in all our employees - from the miners at the rock face to executive management - to ensure that we operate safely and productively. See Safety and health for more detail on the roll-out of this strategy in the safety sphere.
Our risk management strategy is essentially a four-layered approach to identifying, assessing and controlling all hazards and risks that could impact our ability to achieve safe and profitable production.
The structure of this four-layer approach includes:
Identifying risks and analysing the most effective strategies or initiatives (which we refer to as golden controls) to mitigate those risks
Implementing those golden controls with routine inspection and maintenance
Continuous monitoring to assess the effectiveness of controls, with regular analysis and reporting, and action management on all failures
Identifying and defining any improvements that could be made to any of our risk management initiatives
Key to the effective roll-out of this strategy has been the modernisation and digitisation of all our systems and processes across the group, a process that has been underway since 2018. A modernised, digital operating platform not only enables the company to collect and store essential data more efficiently, it also facilitates more effective analysis of hazards and risks in real-time.
Since 2018, the roll-out and implementation of Harmony’s risk management strategy has focused on safety with the specific aim of improving the group’s safety performance and embedding a proactive culture towards safety. Such has been the successful implementation of this approach in the area of safety that Harmony will be rolling out this risk management strategy to all spheres of the business during the course of FY21. As such a multi-faceted approach requires considerable co-operation, we have secured buy-in from all relevant stakeholders of our business.

Harmony risk management strategy - systems and processes
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DETERMINING OUR MOST SIGNIFICANT RISKS AND OPPORTUNITIES
Once we have determined our group-level risk appetite and tolerance levels, we continue to monitor our risks and to identify and manage those that are most material to the company. While our group-level risk appetite and tolerance levels are subject to formal annual reviews, they are continually monitored for relevance in terms of changing macro-environment factors. Our tolerance levels are further defined at lower tolerance limits per risk.
Group risk appetite
Harmony is in the business of gold mining – in South Africa, the rest of Africa and Papua New Guinea. Gold mining is a high-risk, high-reward business
We are involved in the entire gold mining value chain – from exploration, feasibility studies, building and buying mines, operating mines and closing and rehabilitating mines at the end of their operating life
We are exposed to gold price and exchange rate volatility and, where appropriate, will mitigate some of this exposure through hedging programmes
We operate well in emerging economies and are able to deal with associated socio-political dispensations
Exploration remains one of the most effective ways to grow an orebody and create value and, for this reason, we continue to invest in exploration
We have an appetite for change and continuous improvement, and are continuously looking for innovative ways to improve our existing mines and acquire mines that we can improve on operationally
Deep-level, narrow-reef gold mining in South Africa is very labour intensive and we have the skills to deal with the challenges of multi-stakeholder labour relations
Our experienced teams have strong values and are committed to deliver

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Group risk tolerance
We will tolerate no deviation from the Harmony values
Group net debt balance shall not exceed a multiple of one times annual EBITDA
We have zero tolerance for corruption, bribes, and other under-handed transactions
Any unforeseen damage to the environment must be prevented and remedied immediately should this occur

STAKEHOLDER ENGAGEMENT AND MATERIAL ISSUES

WHY STAKEHOLDER ENGAGEMENT MATTERS
Mining companies are dependent on their fixed mineral deposits and cannot relocate to new locations when facing deteriorating socio-enviro-political conditions. For this reason, companies need to be able to navigate these complex dynamics in order to retain their social licence to operate. Stakeholder engagement is the principle mechanism through which companies can manage and address a wide range of issues, particularly those relating to employees, host communities and government authorities.
Our stakeholder engagement plan is aimed at effective stakeholder engagement, which builds partnerships and aids understanding of stakeholders’ needs and expectations as well as of their perceptions of Harmony. This approach enables us to identify, prioritise and better manage issues, as well as any potential risks and opportunities.
In order to secure the involvement and commitment of the different stakeholders, Harmony has proactively, and in accordance with its stakeholder engagement policy, adopted measures and practices to inform and guide engagements with stakeholders. These include but are not limited to the different levels of government and the communities. The platforms used include:
Establishment of community engagement structures, where they did not exist previously or re-establishing them in instances in which they did not adhere to the community/stakeholder engagement principles of inclusivity, legitimacy, transparency or had an acceptable governance framework
Scheduled meetings with host municipalities, specifically executive mayors and municipal managers
Breakfast meetings with the provincial executive councils
The quality of the relationships with stakeholders and how well these are managed affect our ability to deliver on our strategy. Improving the quality of and building long-term, stable, mutually beneficial stakeholder relationships protects our social licence to operate, supports the success of our business strategy and creates shared value for all our stakeholders.
The Covid-19 pandemic has highlighted the need for collective action, revealed our interdependencies and strengthened our relationships with various stakeholders. It is on this basis that we look forward to working together with stakeholders in FY21 and beyond.

GOVERNANCE AND AIMS OF STAKEHOLDER ENGAGEMENT
Our stakeholder engagement processes are guided by our stakeholder engagement policy and comply with relevant legislation and standards, including ISO 14001 and ISO 9000. They also take account of King IV and related recommendations on inclusive stakeholder engagement and the importance of addressing stakeholders’ legitimate concerns. The governance of and responsibility for stakeholder relations lies with the social and ethics committee, with the board having ultimate accountability.
We conduct regular engagement with stakeholders to understand their concerns, to identify and prioritise material issues and potential risks, and to determine action plans to manage such issues and risks. In engaging with stakeholders, we are guided by our values and our strategic intent to:
develop relationships founded on integrity, transparency and trust
support government by establishing collaborative partnerships with stakeholders
balance and align our goals and stakeholder expectations
establish accountability
improve stakeholder understanding of Harmony’s challenges, requirements and concerns
support value creation by maintaining awareness of broader economic and ESG issues




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OUR MATERIAL STAKEHOLDERS
Harmony has a host of stakeholders with whom we engage. For the purposes of this report, we have identified the most material of these stakeholders - that is those with whom we engage more frequently - based on the following:
Extent of their contribution to our efforts to deliver on our strategic goals
Their potential to impact our performance
Significance of the risk of not engaging with them

ENGAGING WITH STAKEHOLDERS AND RESPONDING TO THEIR CONCERNS
We have considered and self-assessed the nature/quality of our relationships with these material stakeholders as follows:

INVESTORS AND FINANCIERS
(Includes capital providers, current and future shareholders and, indirectly, investment analysts and financial media)
Significance: provide financial capital
Aims of engagement
Form of engagement
Concerns
Response
    Reporting on all aspects of our performance
    Managing expectations relating to our financial, operating and ESG performance
    Providing guidance on delivery against our strategic objectives
    Results presentations
    Annual reporting
    Website
    One-on-one calls and industry conferences
    Meetings, including the annual general meeting
    Regulatory announcements
    E-mails sent to our database
    Safety performance
    Power security in South Africa
    All-in sustaining costs and the impact of higher social demands. Management of Covid-19 pandemic and related implications
    Conclusion of acquisition of Mponeng and Mine Waste Solutions and possible synergies to unlock value
    Continued implementation of risk-based management strategy to improve safety performance
    Plans put in place to access solar power
    Higher production results in lower costs, allowing Harmony to share profits with all stakeholders
    Acquisition concluded on 14 September 2020, with Harmony taking effective control on 1 October 2020
    Rights issue to fund acquisition successfully completed in June
    This acquisition will support our long-term sustainability
    Detailed communication on action taken to address Covid-19 pandemic – viability of company and livelihoods of surrounding communities ensured

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EMPLOYEES AND UNIONS
Significance: provide human capital, including skills and experience.
Aims of engagement
Form of engagement
Concerns
Response
•    Emphasising the importance of safety, reducing risk, procedural compliance
•    Maintaining stable, constructive, peaceful labour relations
•    Reporting performance against our strategic objectives
•    Regular, frequent communication takes various forms – mass meetings, briefs, intranet, newsletters, emails, internal broadcasts, WhatsApp/text messages
•    Structured, formal regular meetings with unions
•    Safety – eliminating injuries and preventing fatalities
•    Covid-19 pandemic and related health concerns, treatment
•    Transformation in South Africa and localisation in Papua New Guinea
•    Security of employment during Covid-19
•    Ongoing communication to raise safety awareness and continued roll-out of risk management process
•    Encouraging a more engaged and proactive safety culture
•    Implementation of Covid-19 standard operating procedures and related communication on how employees should protect themselves, keeping safe and on what to do if tested positive
•    Processes underway to improve transformation and localisation
COMMUNTIES AND NON-GOVERNMENTAL ORGANISATIONS
Significance: that aspect of social and relationship capital which represents responsible corporate citizenship and impacts our social licence to operate.
Aims of engagement
Form of engagement
Concerns
Response
    Establishing collaborative partnerships with host communities based on shared value
    Managing our socio-economic and environmental impacts as well as community expectations
    Resolving community grievances
    Promoting economic stability
    Regular, formal meetings with community structures
    Issues-based meetings
    Media to support community engagement includes interviews and ads on radio and articles and ads in newspapers
    Employment opportunities and job creation
    Procurement opportunities
    Enterprise development
    Mine community development
    Illegal mining
    Launched a social facilitation project to assist in the setting up of inclusive and legitimate community engagement structures
    Hosting of supplier days within host communities to facilitate localised economic growth and development
GOVERNMENT AND REGULATORS
(Engagement is undertaken at all levels of government - regional, provincial and national)
Significance: enact legislation and related regulations with which Harmony must comply in order to earn its regulatory licence to operate.
Aims of engagement
Form of engagement
Concerns
Response
    Maintaining positive relations with all levels of government to better manage the uncertainty around regulatory changes and political risk
    Collaboration
    Reporting on compliance and developments and/or changes at our operations and projects
    Promoting an environment conducive to investment for long-term growth
    Formal reports
    Issues-based meetings
    Engagement is frequently undertaken through industry bodies such as the Minerals Council South Africa and the PNG Chamber of Mines and Petroleum which represents the mining industry at relevant parliamentary portfolio committees and campaigns on the industry’s behalf
    Compliance
    Safety performance
    Transformation
    Land redistribution
    Crime and poverty alleviation
    Accelerated transformation programme in place

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SUPPLIERS
Significance: provide raw materials, inputs and services essential to the conduct of our business.
Aims of engagement
Form of engagement
Concerns
Response
•    Managing costs and aligning with our policies on the environment and climate change, transformation and enterprise development, thus helping us to deliver on our strategic objectives and supporting our long-term viability
•    In South Africa, such engagement is essential in helping us meet procurement targets in relation to our mining rights
•    One-on-one, issues-based meetings
•    Email and website
•    Industry meetings
•    Contracts and service agreements
•    Long-term sustainability and continuity of our business
•    Preferential procurement
•    Alignment with Harmony’s values, policies and practices (human rights, labour relations, safety and environmental)
•    Ethical conduct, bribery and corruption
•    Continuing engagement with key suppliers
•    Dedicated initiatives in place giving preference to local suppliers and the historically disadvantaged
•    In South Africa, initiatives are in place to support local small business by means of supplier days and a significant portion of our social and labour plan budget allocation is aimed at promoting entrepreneurial skills and small, medium and micro business development, especially among women and youth
•    Contracts and service agreements are aligned with policies on ethical conduct
DETERMINING OUR MATERIAL ISSUES
To determine our material issues, we identify and prioritise those issues which have the potential to impact our ability to meet our strategic objectives and to create value. In so doing, we also consider the potential of these issues to impact our governance, performance and prospects, and take into account the following:
Our risk profile
Our external operating context
Stakeholder feedback
Any emerging industry issues
Once the material issues have been identified, we develop systems and processes to monitor, review and report on them. In addressing these material issues, SDG 17 (Partnerships for the goals) is critical. Harmony collaborates with other entities to address these issues and create shared value.

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Material issue
Rationale/explanation
Related SDGs:
Ensuring employee safety and health
•    Preventing workplace fatalities and injuries
•    Eliminating and managing occupational health
•    Managing the outbreak of the Covid-19 pandemic – and all that it entails
•    Reducing airborne pollutants and inhalable hazards in the workplace
Stakeholders affected
    Employees
    Trade unions
    Government departments
•    Investors
Our focus on ‘zero harm’ represents an investment in the business. A safe, healthy workforce contributes to an engaged, motivated and productive workforce, which in turn mitigates operational stoppages, reduces potential legal liabilities and averts reputational damage.
The Covid-19 pandemic and safety are included in the ranking of our top 10 group risks.
With the forthcoming acquisition of Mponeng, the world’s deepest gold mine, we will renew our commitment to ensuring zero harm in the workplace given the risk of safely mining at such depths.
Directly affected:
Good health and well-being
Decent work and economic growth
 
Social licence to operate - contributing to self-sustaining communities and responsible closure planning
•    Planning for local economic activity and socio-economic sustainability post mine closures
•    Managing community expectations and decreasing community discontent
•    Supporting local and transformational procurement and enterprise and supplier development
•    Ensuring constructive relationships and partnerships with stakeholders
Stakeholders affected
    Communities
    Government departments
    Non-governmental organisations
•    Investors
Given the finite nature of our operations, Harmony acknowledges its socio-economic responsibilities to the communities in its areas of operation. We acknowledge that often our operations are an important economic agent in host communities – as an employer, in supporting local businesses, being a contributor to the rates and taxes of local municipalities, among others. When a mining operation closes, there may be serious economic consequences for host communities.
We aim to support government in creating self-sustaining communities beyond the operating lives of our mines. In so doing, we leverage our skills and infrastructure, develop suppliers, and assist in establishing alternative economic activities that can be sustained post-mining.
To expand local employment opportunities, increase tax revenues, and meet increasing community demands for improved infrastructure and greater environmental protection, government continues to pressurise the mining industry. Accordingly, there is a growing need to achieve measurable social outcomes and build sound relationships around operations.
Engaging with stakeholders is key to implementing our business strategy. Failing to do so jeopardises our social licence to operate and could reduce opportunities in the market.
Directly affected:
Sustainable cities and communities
Indirectly affected:
No poverty
Zero hunger
Quality education

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Responsible environmental stewardship - mitigating the impacts of our mining activities
•    Water – infrastructure, management and discharges
•    Energy – infrastructure, management and supply security
•    Climate change – our contribution (emissions management) and its impact on Harmony
•    Waste management
•    Land management and biodiversity
•    Integrated closure
•    Remediation obligations and provisions
•    Responsible cyanide consumption
•    Integrity of tailings storage facility
Stakeholders affected
    Communities
    Government departments
•    Non-governmental organisations 
    Investors
To deliver on our business objectives, we rely on a capable, motivated and engaged workforce that behaves in a manner that is consistent with our values and Code of Conduct. We strive to establish a high-performance culture, by ensuring an organisational structure that is fit for purpose and empowering employees by equipping them with the necessary skills and to deliver on our strategy.
Directly affected:
Good health and well-being
Gender equality
Decent work and economic growth
Indirectly affected:
Quality education
Reduced inequalities
Navigating political and regulatory uncertainty
In South Africa:
•    Increasing cost of regulatory compliance – the carbon tax
•    Uncertainty around land expropriation
In Papua New Guinea:
•    Increasing regulatory uncertainty could jeopardise our continued operation and delay our proceeding with the Wafi-Golpu project
Stakeholders affected
    All levels of government and government departments
    Industry bodies
    Community at large
•    Investors 
There are two aspects to political and regulatory changes – the resulting uncertainty and the financial impact of such changes.
Uncertainty affects our decision-making and our ability to ensure the sustainability of our business. While the uncertainty in South Africa appears to have abated somewhat and we continue to assess the financial impact of forthcoming legislation, in Papua New Guinea the prevailing uncertainty there is delaying the making of decisions that are key to the company’s longevity and profitability.
Directly affected:
Partnerships for the goals
 

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SUSTAINABLE DEVELOPMENT
DELIVERING ON RESPONSIBLE STEWARDSHIP AND THE SDGs

Our responsibility as a corporate citizen extends beyond securing our social licence to operate. It is the foundation of our business and our values.

Our purpose is to create value in the broadest sense and prevent its erosion as we contribute to society, protect the environment and mitigate our impacts so that we leave a positive legacy once mining has ceased and to do so in the most responsible manner possible.

The principles of sustainable development are covered by the fourth pillar of our business strategy - responsible stewardship. This pillar, which supports our aim to produce safe, profitable ounces, entails us being mindful of the impacts of our business activities - on our employees, host communities and the environment - and to have in place plans to limit, manage and mitigate these impacts. It is only through engagement and partnerships that we are able to continue the responsible and sustainable mining of gold in both South Africa and Papua New Guinea. We adhere to the laws and regulations pertaining to sustainable development in each of these countries.

SUSTAINABLE DEVELOPMENT GUIDELINES AND FRAMEWORKS APPLIED

United Nations Sustainable Development Goals (SDGs): These 17 goals, which were adopted by member states in September 2015, contain 169 indicators and targets. They are aimed at creating a better world by 2030, by eliminating poverty, fighting inequality and ensuring that the world is safe from the worst effects of climate change. An important aspect of these goals is the role of business and the private sector, together with governments, civil society and the public, in achieving these targets. Harmony adopted the SDGs in 2018.

World Gold Council Responsible Gold Mining Principles: These principles address key environmental, social and governance issues for the gold mining sector and set out clear expectations for consumers, investors and the downstream gold supply chain as to what constitutes responsible gold mining. We are currently in our first year of the three-year process for formal certification in line with these principles.

Task Force on Climate-related Financial Disclosures (TCFD): We have produced our first report in accordance with these disclosures for FY20. Previously, we had reported on our climate-related performance in our submissions to CDP Climate Change (formerly the Carbon Disclosure Project). We continue to report on water related performance in our submission to CDP Water.

Although Harmony is not a member of the International Council on Minerals and Metals (ICMM), or a signatory to the United Nations Global Compact (UNGC) or the Voluntary Principles on Security and Human Rights (VPSHR), we are guided by and have adopted their principles to support our sustainable development framework, particularly those relating to management of tailings storage facilities. We also take into account the Organisation for Economic Co-operation and Development’s (OECD’s) guidelines for responsible investment.

As a member of the Minerals Council South Africa, we subscribe to their Membership Compact, a mandatory code of ethical business conduct, and its guiding principles.





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ALIGNING WITH THE SDGS

Given our dependence on natural and human resources, and having operated in emerging market countries for decades, Harmony acknowledges the role we must play in contributing to broader sustainable development issues such as taking action against climate change and fossil-fuel energy consumption, ending poverty, and efficiently managing our use of scarce natural resources such as water, land and biodiversity.

In South Africa, the SDGs are driven through the National Development Plan. As a private sector company and a long-standing South African gold producer, we are committed to doing our part to support the governments in South Africa and Papua New Guinea in reaching these goals. Our core purpose also aligns our business objectives with the SDGs.

We have interrogated the SDGs to identify those most aligned with our core business, our sustainable development strategy and with our responsibilities as a responsible corporate citizen.

We have identified and prioritised six SDGs that are directly aligned with our core business strategy and its four pillars. We have also identified an additional four SDGs to which we can meaningfully contribute through our sustainable development strategy and by delivering on our socio-economic development commitments. Many of the SDGs are interconnected.

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TIER 1: DESCRIPTION
3
Ensure good health and promote the well-being of all
5
Promote gender equality and empower women and girls
8
Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work
12
Ensure sustainable, responsible consumption and production patterns
13
Take urgent action to combat climate change and its impacts
15
Protect, restore and promote the sustainable use of terrestrial ecosystems, halt and reverse land degradation, and halt biodiversity loss

TIER 2: DESCRIPTION
1
End poverty in all its forms everywhere
2
End hunger, achieve food security and promote sustainable agriculture
4
Ensure inclusive and equitable quality education and promote lifelong learning opportunities
11
Make cities and human settlements inclusive, safe, resilient and sustainable

COLLABORATING FOR THE SDGs
17
Collaboration with various stakeholders

TIER 1:
SDGs WHICH ARE CENTRAL TO OUR CORE BUSINESS AND STRATEGY

In conducting our business and acting to deliver on the four pillars making up our strategy, we contribute directly to certain SDGs. Our drive for operational excellence and our commitment to responsible stewardship, especially of the environment, to transformation and to gender equality enables our direct contribution to the following SDGs:

GOAL
WHAT HARMONY IS DOING
3 Good health and well being
The safety, health and well-being of employees is a priority. In many instances, this extends to our communities where many of our employees reside. More recently, combatting the Covid-19 pandemic in both countries in which we operate has taken precedence.

See Safety and health for more information
5 Gender equality
In recent years, gender equality has become an increasingly important aspect of our human resources policy. Gender diversity targets are in place and we are actively engaged in increasing the number of women employed across the company, at all levels.

See Employee relations and Corporate governance for more information
8 Decent work and economic growth
We provide employment for approximately 40 000 people. We aim to be a fair and responsible employer, to deliver on our business strategy and ensure our long-term viability, and to respect the rights of employees to associate freely. Training and development programmes empower employees to contribute to the company and society.

See Employee relations for more information
12 Responsible consumption and production
A key pillar of our business strategy is operational excellence. This includes optimising our processes, grade management and costs to improve productivity and efficiencies. This inherently involves the efficient use of natural resources, responsible waste management and sustainable procurement practices. In addition, it includes regular sustainable development reporting.

See Operational performance and Environmental management for more information

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13 Climate action
Reducing our impact on climate change is vital. In South Africa, where much of the energy we consume is fossil fuel, long-term targets aim to reduce energy consumption, improve related efficiencies and reduce greenhouse gas emissions. In Papua New Guinea, a significant portion of energy used is renewable (hydro-power) energy.

See Environmental management and TCFD report 2020 for more information
15 Life on land
Our environmental strategy and related policies and procedures seek to mitigate the environmental impacts of our mining activities. In South Africa, a rigorous land rehabilitation programme is under way.

See Environmental management for more information

TIER 2:
Much of the work we undertake to address our socio-economic development responsibilities focuses on infrastructure, education and skills development, job creation and entrepreneurial development, broad-based local and community economic empowerment and enterprise development initiatives. Women and the youth are frequently the focus in these initiatives. By investing in the future of our communities, we contribute to these SDGs:

GOAL
WHAT HARMONY IS DOING
1 No poverty
Harmony employs around 40 000 people who in turn support their families, and the local businesses and municipalities in the communities in which they live. Many of our socio-economic initiatives are aimed at creating and supporting sustainable economic activities - see SDG 11 - and also help to combat poverty.
2 Zero hunger
We support broad-based agriculture and commercial agricultural ventures to establish alternative, sustainable economic activities that will endure once mining ceases and to contribute to food security. In South Africa, our focus is on the cultivation of grains and vegetables. In Papua New Guinea, the cocoa and coffee projects are progressing well.
4 Quality education
In South Africa, we focus on advancing mathematics, science and technology at secondary school level. In addition, at community level, we promote training in entrepreneurial and portable skills as well as information and communication technology among the youth.
11 Sustainable cities and communitites
Our recently revised socio-economic development strategy focuses on agricultural, infrastructure and sustainable energy projects, which have greater potential to deliver sustainable long-term benefits to communities. This strategy is supported by preferential and local procurement, and enterprise and supplier development. The overall aim is to help establish sustainable communities that are economically viable once mining has ceased. Infrastructure projects (such as roads in South Africa and water and sanitation in Papua New Guinea) help to boost the resilience of host communities.
For more information on Harmony’s contribution to these tier 2 SDGs, see Socio-economic development
Collaborating for the SDGs
A significant amount of the work that we do in relation to sustainable development and our ESG performance is undertaken in collaboration with various stakeholders, thus supporting SDG 17 - partnerships for the goals:

17 Partnerships for the goals
Partnering to aid delivery on the SDGs entails strengthening the means of implementation and revitalising partnerships - with communities, local municipalities, small businesses and various levels of government - for sustainable development. This we strive to do at both local and regional levels.

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ENSURING STABILITY, EMPLOYEE SAFETY AND WELL-BEING

SAFETY AND HEALTH

ZERO HARM
At Harmony, our employees are our most important stakeholder and a vital capital. Their safety and health are a moral imperative and thus paramount. In line with our values, of which safety is the first, we firmly believe that no product is as important as our employees, who should return home daily, safe and healthy.
This philosophy extends to the communities, where many of our employees live and which are impacted by our operations. We believe that contributing to the health and well-being of our community members facilitates a socio-economic ecosystem in which our business and all stakeholders can thrive.

Capitals affected:
Directly
Indirectly
HUMAN CAPITAL
FINANCIAL CAPITAL
SOCIAL AND RELATIONSHIP CAPITAL
INTELLECTUAL CAPITAL
 
MANUFACTURED CAPITAL
Stakeholder/s affected:
Employees
Other stakeholders engaged include governmental and regulators
 
 
 
 
Strategic pillars:
Related risk:
Operational excellence
•    Covid-19 pandemic – spread of infection and potential impact on business sustainability (risk 1)
Responsible stewardship
•    Failure to eliminate fatalities and improve safety performance (risk 2)

Responsible committee:
Technical committee (safety)
Social and ethics committee (health)

GRI Standards:
Prepared in accordance with: 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7, 403-8, 403-9 and 403-10

CONTRIBUTING TO THE SDGs:
The safety, health and well-being of employees are a priority, in line with our strategy and our values. Our safety and healthy strategy contributes directly to SDGs 3 and 8, which target and promote the health and well-being of all and decent work. In this context, ‘decent work’ refers to employment that is productive and delivers a fair income, provides security in the workplace and social protection for families, ensures better prospects for personal development and social integration, facilitates freedom for people to express their concerns, allows employees to organise and participate in the decisions that affect their lives, and guarantees equality of opportunity and treatment for all women and men.



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GOOD HEALTH AND WELL-BEING
DECENT WORK AND ECONOMIC GROWTH
•    The health and wellness of employees is important to their being able to live full, productive lives
•    We focus on occupational health, chronic diseases such as TB and HIV/Aids, as well as lifestyle diseases
•    More recently, combatting the Covid-19 pandemic has taken precedence and become the overwhelming focus of our health services; however, the pandemic has served to embed Harmony’s proactive approach to health and safety
•    As a responsible employer, providing decent work includes ensuring that everything possible is done to safeguard employees, ensure that workplaces are safe and to prevent injury or harm so that employees return home, safe and well
•    Employees have the right to refuse to work when they consider a workplace unsafe
•    Training and other support are provided to encourage safe behaviour and conduct
For more information on our contribution to the SDGs, see Our sustainable development framework

OUR APPROACH TO SAFETY AND HEALTH
The safety, health and well-being of our employees is an area that poses some of the highest risks to our business. Not only does this have the potential to negatively impact our human capital, it could also affect our ability to deliver on our strategic objectives. It is in this context that we have two key operational focuses: to ensure a safe and healthy workplace and to create a proactive safety culture where our employees stop, assess and manage all work-related risks. Ensuring these two aspects will ultimately contribute to the delivery of our business objectives as well as the sustainability of our business.

The tenets of our safety and health policy, which forms part of our broader sustainable development framework, focus on:
Ensuring that leadership at all levels leads by example and creates an enabling environment for driving continuous improvement in safety performance
Ensuring that high-risk safety and health exposures are managed through focused strategies with risk management as the bedrock
Promoting the health of our employees by pro-actively supporting their physical, psychological and emotional well-being
Providing an integrated, proactive healthcare service by making primary, occupational and wellness facilities easily accessible to employees at work
Ensuring that Harmony manages community health exposures and promotes the well-being of our host communities

All of these aspects were covered by the standard operating procedure developed to address the challenges of the Covid-19 pandemic, helping to reinforce our safety and health policy.
Our occupational safety and health policy and related management frameworks are aligned with the Mine Health and Safety Act in South Africa and with relevant legislation in Papua New Guinea, including the Mining (Safety) Act and associated regulations. We also apply best practices and guidelines as prescribed by the International Council on Mining and Metals. Our approach to safety encompasses critical control management, preparedness, prevention and the monitoring, review and analysis of relevant safety and health data indicators.

GOVERNANCE
At board level, the technical committee is responsible for approving and monitoring compliance with our safety and health policy, and with legislation. Safety is a key performance indicator for management and is accordingly monitored to determine remuneration in terms of safety performance. A report on safety incidents and achievements forms part of the chief executive officer’s report to the board. At every board meeting, the chairperson of the technical committee also provides feedback to the board on Harmony’s safety performance.
Representatives of management, unions, the Minerals Council South Africa and government participate in structures aimed at emphasising the importance of safety and how to achieve our goal to eliminate fatalities and prevent the loss of life.
At our South African operations, operational safety and health committees ensure that all employees are involved in managing and ensuring the safety of all. In FY20, there were 41 full-time safety and health representatives at our South African operations. The chief operating officer: South Africa reports on safety to the group executive committee on a weekly and quarterly basis, and shares a quarterly presentation with the technical committee.

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Harmony is involved in and contributes to external safety initiatives and leading best practices in the mining industry for implementation through the Mining Industry Occupational Safety and Health (MOSH) Community of Practice Adoption (COPA) process. For each aspect of occupational safety and health, champions are nominated to attend industry meetings and ensure that relevant information is disseminated to all operations.
In Papua New Guinea, safety managers report regularly to the South East Asia executive committee by way of notifications, formal monthly reports and meetings. This committee in turn - through the chief executive officer South-East Asia - reports to Harmony’s group executive team on a weekly basis and provides a report to the technical committee on a quarterly basis.

SAFETY
Safety is a key material risk for Harmony and is integral to our strategy - to produce safe, profitable ounces. Our safety performance can not only fundamentally impact the lives and well-being of employees, but can also have implications for other aspects of our business, not least financial. It also has potential consequences for other capitals such as social and relationship capital, and manufactured capital. Moreover, it can have a significant impact on our brand and reputation. It remains our determined ambition to prevent loss of life incidents and achieve zero harm across all our operations so that our employees can return home daily, safe and healthy.

RISK MANAGEMENT STRATEGY
Given the prominent level of risk safety poses, in 2018 we adopted and began implementing a group-wide risk management strategy for safety that applies to all our operations in South Africa and Papua New Guinea. This strategy effectively involves identifying, assessing and controlling all threats that could cause harm to any of our employees. It is based on data capturing, analysis and reporting to support proactive risk management initiatives and aid safe and profitable production. It also aims to compel a behaviour change towards safety to one that is far more engaged and proactive. This is a multi-faceted and co-operative approach that has achieved buy-in from all relevant stakeholders. The risk management strategy was explained in more detail in our Integrated Report 2019.

Governance on safety has been set out below:
ex15iar20governanceonsafety.jpg

This strategy is being rolled out in a four-phased approach in order to systematically embed risk management into our operational culture and behaviour of all employees. Phase 2 was completed during FY20. Phase 3 began in early calendar 2020, simultaneously with the roll out of phase 4.
Phase 2 of the roll-out, which began in April 2018, concerned the modernisation of systems, processes and information sharing, which has been undertaken to facilitate more proactive management. Essentially, a modernised operating system provides our mining teams with the safety and hazard information required before entering the workplace so that crews are aware of all hazards identified in previous shifts and can take the steps necessary to ensure that a workplace is safe before entering. The following initiatives were included in phase 2:
Upgrade of Syncromine to include risk management, which continued into FY20
Implementation of optical character recognition software, which enables the complete scanning of all documents to speedily identify certain risks and hazards. Before the introduction of this software, inspections

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were an 80% manual and 20% automated process, with our operations relying on data captured by safety officers every 30-45 days to understand workplace conditions. This meant that we only had line of sight of approximately 20% of all potential risks in the workplace. As of the end of FY20, this software had been installed and successfully implemented in a majority of our operations
Implementation of risk management call centres at each operation. These are essentially a “one-stop-shop” for employees to collect and return all risk management-related checklists and forms, and a mechanism through which employees can direct risk management strategy and safety-related queries
With the successful completion of that second phase at the end of 2019, we progressed to phase 3 of the roll-out at the beginning of calendar year 2020. This has largely focused on ensuring that the appropriate interventions are in place in all operations to embed a proactive approach to safety. Included in this phase is the implementation of golden control monitoring and the improvement in response to golden control failures. Golden controls are essentially the principal preventative safety measures we use on our operations. The risk management platforms implemented in phase 2 and the integration of inter-disciplinary systems to provide transparent view control efficacy have supported automation of golden control monitoring and response.
As part of phase 3, Harmony has undertaken to systematically entrench the International Council of Mining and Metals’ critical management plan at all operations. This is essentially a guidance note that sets out the process to identify those controls to be implemented and the elements that need to be in place to ensure they are effective. With the use of this critical control management plan, our operations have been better equipped to identify both significant unwanted events and related mitigating controls.
While the modernisation of our systems and processes has been pivotal to improving safety performance, the risk management strategy would be largely ineffective without the human behaviour element. It is for this reason that phase 4 has, and continues to be, rolled-out in parallel with the other phases. This phase centres on a humanistic strategy that aims to embed a behavioural approach to safety. Moreover, this strategy aims to mould and ensure our management teams are proactive and effective leaders so that our workforce is more engaged and that the relationship between employees and management is based on trust, on both sides. The aim is to provide platforms for employees to communicate freely, without feeling threatened, and to provide management with the skills to be effective and connected leaders. For more details on our leadership programme, see Employee relations.
Further to this, we also introduced an initiative to identify an employee’s propensity to take risks with the aim of managing that behaviour. This programme has already identified clusters of high-risk taking behaviours at leadership and employee levels. Programmes developed and introduced to further embed safe behaviour focus on recognition; symbols – in terms of rewarding safety achievements and proactive safe working behaviour – optimising team functioning and teaching.

Harmony’s four-layer risk management strategy
ex15iar20fourlayerriskmanag.jpg

The risk management strategy is proving effective in improving safety performance. With modernised systems and processes in place, we are now better equipped to continuously assess workplace conditions and equipment to ensure no undue risks are posed to any employee on the surface or underground. We are also able to more effectively monitor the progress of various safety-related initiatives that have been implemented at the various operations.

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However, the real effectiveness of the risk management strategy was proven through Harmony’s response to the Covid-19 pandemic that hit South Africa and Papua New Guinea in early 2020. The roll-out of our four-phase risk management strategy effectively equipped Harmony with the necessary resources and processes to proactively respond to the Covid-19 pandemic and enabled us to continue operating safely, where and when it was feasible. For more details refer to the country-specific responses to the pandemic.

OUR PERFORMANCE FY20
Group safety performance regressed overall in FY20 with a recorded group lost-time injury frequency rate of 6.33 per million hours worked (FY19: 6.16). There were, regrettably, six mining-related fatalities during the year (FY19:11), all at our South African operations. The Papua New Guinean operation maintained its fatality-free performance for the fourth consecutive year.

South Africa
The South African operations experienced a mixed performance in terms of overall safety performance in FY20. While there were, regrettably, six fatalities (FY19: 11), this did represent an improvement in our fatal injury frequency rate, from 0.13 in FY19 to 0.08 per million hours worked. Most notably, our South African operations achieved 120 fatality-free days to 17 December 2019 and 102 such days to 3 June 2020, respectively the third and fourth longest fatality-free periods in our 70-year history.
The reportable injury frequency rate improved for the third consecutive year – to 3.88 per million hours worked (FY19: 4.05). However, our lost-time injury frequency rate regressed slightly to 6.69 per million hours worked (FY19: 6.48). This equated to the loss of 25 146 shifts due to occupational injury. The fall-of-ground injury frequency rate also regressed, from 1.11 to 1.22 per million hours worked, as did the rail-bound equipment injury frequency rate, which deteriorated by almost 27% to 0.70 per million hours worked (FY19: 0.55).
When analysing this safety performance, it is essential to factor-in the impact of the Covid-19 pandemic. Owing to the forced suspension of our underground mining activities for five weeks and other restrictions related to the national lockdown, our South African operations collectively lost 1.2 million shifts in FY20. This means that the various safety performance statistics were calculated using a much-reduced number of shifts worked of 8.65 million compared to the 9.83 million shifts worked in FY19.
It should also be noted that while the safety performance may seem to have declined owing to the methods of year-on-year calculation, the South African operations in fact recorded 52 fewer accidents in FY20.

ex15iar20numberoffatalities.jpg ex15iar20losttimeinjury.jpg
One of the most prominent factors that contributed to the lost-time injury frequency rate was the repetitive occurrence of winch-related incidents. To address this, a winch pre-inspection was piloted at Doornkop, Kusasalethu and the Tshepong operations. This pre-inspection, conducted by means of the optical character recognition system – software that enables the conversion of paper data to digital, live data that can be tracked, monitored and analysed in real-time – for daily deficiency management and reporting, aims to identify real-time issues reported by winch operators and to bring these to management’s attention for assessment and assistance in ensuring safe winch operations. Given the positive results at those three operations, the pre-inspection process is to be implemented at all operations in FY21.
Our safety performance in FY20 has underscored the need to adopt a more behaviour-oriented approach to safety management, an approach that is tied in with phase 4 of our risk management strategy roll-out. In an effort to embed a proactive safety culture and accountability in our workforce, we implemented several initiatives and programmes in FY20. Among the most notable were:
Reinforcement of the right of all employees to refuse dangerous work and to leave a dangerous workplace. This is in accordance with the Mine Health and Safety Act, sections 22, 23 and 83. It is vital that our employees understand their rights, are engaged and feel safe to perform their duties, and that supervisors, in

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turn, recognise these rights. In addition, front line supervisors are being trained and encouraged to engage with mining crews as well as management on these rights. Effective, frequent communication in this regard is vital. To address this, communication and leadership initiatives are ongoing.
Identification of the most serious unwanted events and assigning responsibility and ownership for these at an executive level. As these identified events have the potential to cause significant loss of life and shifts, they require far more focussed attention by all management levels
Reinforcement of our safety mascot, Thibakotsi, and associated safety messages, signs and symbols
Introduction of a daily work note to ensure that the frontline workforce is provided with the relevant information to proactively plan tasks at the start of each shift
A far more thorough scanning and analysis of daily safe declaration data as a means of assessing workplace conditions and raising awareness of risks and to address repetitive failures
Despite the challenges and slight regression in our safety performance, there is evidence that the risk management strategy is succeeding in positively altering the safety culture at our South African operations.
One notable change recorded in FY20 was the far greater engagement of management and the incorporation of learnings from incidents into daily safety practices. This was particularly evident in the way in which potential seismic hazards were monitored and managed during the year. The enforced daily monitoring substantially reduced the incidence of falls of ground. This practice will be carried forward into FY21 and especially applied when starting up new panels and after shut-down periods.

In memoriam
Date
Operation
Name
Occupation
Cause
25 July 2019
Tshepong
Siyabonga Ntika
Rock drill operator
Gravity-related fall of ground
18 August 2020
Doornkop plant
Thabang Mamogale
Surface assistant
Surface rail-related incident
17 December 2019
Kusasalethu
Elphas Nkosi
Transport supervisor
Rail-bound equipment-related incident
1 January 2020
Tshepong
Tshepang Lebojoa
Locomotive operator
Mud rush
21 February 2020
Kusasalethu
Sibusiso Mngomezulu
Winch operator
Winch-related
3 June 2020
Moab Khotsong
Papa Ernest Dael
Development team member
Heat exhaustion
22 July 2020*
Bambanani
Zamokuhle Shabane
Team leader
Fall from height
11 August 2020*
Kusasalethu
Zakhele Lubisi
Artisan
Tools, machinery and equipment-related
11 September 2020*
Doornkop
Alexis Lesiamang Ntjantso
Rock drill operator
Explosion
10 October 2020*
Tshepong
Tsoaela Botsane
Supervisor
Gravity-related fall of ground
10 October 2020*
Tshepong
Tisetso Pati
Winch operator
Gravity-related fall of ground
* Occurred post-year end

Death and serious injury benefits
Harmony is fully aware of and sympathetic to the devastating impact mine fatalities and serious injuries can have on the employees’ family, particularly in the financial context. In many instances, these employees are the sole breadwinner of a family and often support an extended family of well over ten people. It is for this reason that we have a comprehensive range of benefits to support the family in the incidence of a mine fatality or serious injury.

Matrix of benefits for fatal mine accidents
Matrix of benefits
Description
Provision of coffin and funeral services (cat 4-8 only)
At no cost to the family
Transport of body (cat 4-8 only)
At no cost to the family
Mine delegation to funeral
At least 2 senior managers
Union delegation to funeral
8 union members, paid leave
Mourners in hearse
Maximum of 6
Co-workers transport
Up to 1 x 60-seater bus, paid leave
On mine memorial service
For all employees to attend
Mine Workers Provident Fund (MWPF) advance
R40 000
Rand Mutual Assurance (RMA) Funeral Policy
R30 000
Company donation - provided as soon as possible
R20 000

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Accommodation of family on mine to attend to affairs of the deceased
For 6 family members
Enrolment of children in Harmony Education Fund as per policy
No limitation on number of children
Offer of employment
Immediate offer of employment at the underground entry level

Benefits provided for serious injury on duty
 
Benefit
COIDA benefit
Either a lump sum or monthly benefit is paid to the employee on the percentage disability rating of the disablement
Alternative work
Alternative work is investigated and provided if suitable vacancies exist
Termination benefit
A benefit of two weeks per completed year of consecutive service is provided if no alternative work is available, with a minimum benefit of R60 000
Offer of employment
To an immediate family member
Ongoing care
Employees medically incapacitated as a result of an injury on duty are also placed n the TEBA Home-Based Care programme

Paraplegic benefits
The benefits provided to employees who are made paraplegic as a result of an injury at work are the same as above, however, the termination package is enhanced and the employee’s home is renovated to make it wheel chair accessible and friendly.

Impact of Covid-19 in South Africa
Our modernised systems and processes, which had been rolled out as part of risk management strategy, provided us with the necessary platform and resources to respond quickly to the pandemic, to mobilise our service departments to assess our operational readiness and to enable the implementation of mitigating controls prior to the return of our workforce. It also ensured that we had the relevant information readily available to understand in which areas we would be most vulnerable. While Covid-19 presented Harmony with a myriad of challenges, the state-enforced shutdown of our operations during national lockdown level 5 did present us with a unique opportunity to address various risks in a manner that would not necessarily have been possible in normal circumstances. During this phase of the lockdown, we conducted optical character recognition system inspections to assess workplace conditions, monitor ground conditions, and pursue critical maintenance activities.
Harmony used the shutdown as an opportunity to prepare for a safe start-up; this included routine underground visits by essential service employees to ensure the safe conditions of underground workings, establishing a steering committee and creating risk assessments, procedures, policies and communications to aid the safe resumption of operations during the Covid-19 pandemic and extended shutdown.
The pandemic necessitated a dramatic shift in how we conducted our daily activities at the various operations. We were required to adhere to all legal operating requirements - defined by the Department of Mineral Resources and Energy’s guidelines - which included aspects of screening and symptom reviews, and action management and analysis. All operations were mobilised to conduct self-audits to provide a second layer of response. In addition, disaster mitigation rooms were setup at each operation to monitor the daily efficacy of controls and to manage our Covid-19 response.
A major challenge on the return to work, and one faced by many industries, was the generation of permits and their management. Our modernised risk management system facilitated the effective management of the permitting process to access mine sites. This process has been identified as a leading practice with Harmony being commended by the Department of Mineral Resources and Energy’s principal inspector of mines in South Africa on our quick and effective response.
The behaviour-related aspect of the risk management strategy which was fast-tracked with the onset of the Covid-19 pandemic, greatly assisted in communication with, education of, and psychological assessment of employees. It facilitated the communication of vital information regarding Covid-19, helped prepare employees for their return to work after lockdown level 5, and provided a platform through which they could discuss concerns. A key aspect of this was the isolation and quarantine training programmes.
Despite the easing of lockdown in May 2020 and the return to work, we were only able to reach our full employee complement at the end of August 2020. To enable our operations to resume as fully as possible, it was important to ensure that underground mining crews were adequately resourced. The risk management system enabled us to create a crew composition dashboard which produces a report on relevant data sourced.

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FY20 SAFETY ACHIEVEMENTS
Fatality- and injury-free shifts worked
More than 6 million shifts
Free State operations (rail-bound equipment): 16 million shifts
Target (rail-bound equipment): 9 million shifts
Tshepong (rail-bound equipment): 8 million shifts
Bambanani/Unisel (rail-bound equipment): 7.5 million shifts
South African operations (fall-of-ground): 7 million shifts
Moab Khotsong (fall-of-ground): 6.5 million shifts
Tshepong (rail-bound equipment): 6.5 million shifts
3 million - 6 million shifts
Doornkop (rail-bound equipment): 5.5 million shifts
Kusasalethu (rail-bound equipment): 5 million shifts
Unisel (fall-of-ground): 4.5 million shifts
Free State operations (fall-of-ground): 3.5 million shifts
Phakisa (rail-bound equipment): 3.5 million shifts
3 million shifts
South African underground operations: 3 million shifts
Masimong (rail-bound equipment): 3 million shifts
2 million shifts
Hidden Valley: 2.5 million shifts
Free State operations: 2 million shifts
Harmony One Plant: 2 million shifts
Kusasalethu (fall-of-ground): 2 million shifts
Moab Khotsong (rail-bound equipment): 2 million shifts
1 - 2 million shifts
Target: 1 million shifts
Tshepong operations: 1 million shifts
Tshepong operations (fall-of-ground): 1.5 million shifts
Joel (fall-of-ground): 1 million shifts
Masimong (fall-of-ground): 1.5 million shifts
Bambanani/Unisel unit (fall-of ground): 1 million shifts
Phakisa (fall-of-ground): 1 million shifts
Other significant safety performance
More than three years
Saaiplaas Plant: 13 years reportable injury free
South Uranium Plant: seven years lost-time injury free
Saaiplaas Plant: four years lost-time injury free
Three years
Central Plant: reportable injury free
One year
Central Plant: lost-time-injury free
Doornkop: fatality free

Papua New Guinea
Harmony’s Hidden Valley operation in Papua New Guinea boasts a world-class safety performance record. The operation has recorded no fatalities since 2015, equating to 2.5 million fatality-free shifts. Following two years without a lost-time injury to May 2019, the lost-time injury rate for FY20 was 0.77 per million hours worked compared to 0.35 for FY19. The reason for this regression was predominantly the result of an increase in vehicle interactions and fatigue-related incidents, particularly during the last quarter of the financial year.
Apart from the fact that Hidden Valley is an open-pit mine, with risks being far lower in comparison to underground mines, a variety of factors has contributed to the mine’s better-than-average safety record. Among the most significant

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is implementation of Harmony’s risk management strategy and critical controls at the operation, as well as the successful entrenchment of a proactive safety work ethic in all employees - a behavioural pattern that has been systematically reinforced through visible felt leadership. These measures are accompanied by regular, focused safety training.
The highly-mechanised nature of the mine also lends itself to a higher safety performance. Nevertheless, vehicle interaction is the most significant safety risk at Hidden Valley, followed by fatigue and the uncontrolled release of energy (hydraulic and compressed energy) in the workshops. All mining vehicles are equipped with monitors to mitigate against driver fatigue, prevent vehicle collisions, to observe driver behaviour and to monitor productivity.
At Wafi-Golpu, there is a similar emphasis on proactive safety risk management, the monitoring of critical risks and visible felt leadership.
ex15iar20pnglosttimeinjurya2.jpg

Impact of Covid-19 in Papua New guinea
A caveat to Hidden Valley’s safety performance is the fact that there were fewer employees working on the mine site in the last quarter of the year, owing to the onset of the Covid-19 global pandemic and a national lockdown in Papua New Guinea. While there were fewer employees on site, they also worked longer rosters, as a result of which increased focus was placed on fatigue management. There was also much emphasis on Covid-related hygiene - social distancing, frequent hand washing and the wearing of masks, which had as an unintended consequence, a decrease in upper respiratory infections.

OUTLOOK
Group safety target
In FY21, Harmony will continue its focus on embedding its risk management process to create a more engaged and proactive safety culture across all our operations. Hand-in-hand with this strategy is the objective to improve our safety performance by 10% on the average performance of the previous three financial years.

South Africa - safety focus for FY21
Our priorities will include:
Digitising information to allow us to make informed decisions as and when circumstances that may compromise safety are identified
Accessing and including industry-wide best practice learning material and methodologies through the International Mining Standards Hub - in which Harmony participates as a founder member
Detailed analyses of our responses - on integrated platforms - to identify opportunities to improve and mitigate safety risks
In terms of our four-layer risk management system, we will continue to:
map out critical production processes and align inter-disciplinary processes (process mapping) and documentation to provide assurance that our legal and social obligations are addressed. This will be achieved by embedding the identification of risks and controls into our risk and legal documentation. The aim is to have a single source of content related to task assessment (procedures, training, risk assessment, continuous monitoring and reporting)
integrate specified routines - ensuring an integrated approach in identifying potential risks during

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the planning phase as well as in identifying mitigating controls and monitoring actions prior to the start of work. This will include the introduction of integrated services work planning and monitoring for phase 3
further engage all leadership, including organised labour, as partners to advance our behaviour-oriented strategy (phase 4). This will also involve developing and implementing a behaviour tracking and monitoring programme to allow leaders real time access to critical behaviour data from a safety improvement perspective

Papua New Guinea - safety focus for FY21
Our safety objective for the Hidden Valley mine is to remain fatality-free and, more importantly, to improve our safety performance following its regression during the past financial year. We have a target to achieve a 0.00 lost-time injury frequency rate over the next six to 18 months. This will be achieved with the help of visual felt leadership, a more proactive and engaged workforce, and field critical control checks.

Health
The onset of the Covid-19 pandemic, which rapidly swept across the globe in early 2020, placed a glaring spotlight over our healthcare strategy. The highly-contagious severe acute respiratory syndrome posed an unprecedented health risk to our employees and tested our resources and capabilities to the limit.
This was, and continues to be, an unparalleled challenge in Harmony’s 70-year history. However, the pandemic has served to underscore, firstly, the effectiveness of our healthcare strategy and, secondly, the pivotal role this strategy plays in supporting our business. Moreover, it has embedded Harmony’s approach to safety and health as wearing masks and observing social distancing has taught us why preventative safety measures are so crucial.
Our approach to healthcare is proactive and risk-based and aims to ensure that healthcare is easily accessible to all our employees. This approach is founded on our firm belief that every employee deserves a fulfilled and healthy life. It is important that our employees are fit for life, fit for work and fit to retire.
The four pillars of our healthcare strategy are:
Education, awareness and promotion of good health
Disease prevention and risk management
Clinical intervention (treatment programmes)
Continuous risk profiling
Harmony’s proactive healthcare strategy aims to manage illness by identifying and treating disease early thus helping to prevent permanent disability and disease. Medical surveillance, active case finding, early detection and treatment of disease are integral aspects of our management healthcare system.
We also have dedicated health hubs at all of our operations, which caters for all the medical and health needs of our employees and, in some cases, of our host community members. Each health hub is staffed by doctors, allied health care workers and pharmacists. Moreover, we ensure that medical doctors are part of the operational teams in each of our mines.

Governance
At board level, the social and ethics committee is responsible for approving and monitoring compliance with our health policy, and with legislation.

Our performance FY20
In FY20, a total of R779 million (US$49.7 million) was spent on health-related costs and initiatives across the group. Of that, R70 million (US$4.5 million) was specifically spent on Covid-19 preventative initiatives in both South Africa and Papua New Guinea.

South Africa
Our healthcare focus in FY20 was essentially a story of two parts. In the first three quarters of the year, we maintained our focus on initiatives that served to support our strategy of promoting employee wellness, ensuring good healthcare and managing diseases. However, this was entirely eclipsed by the advent of the Covid-19 pandemic in early March 2020. The rapid spread of the disease across South Africa compelled us to shift our focus and resources almost entirely to tackling the pandemic.

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In all, Harmony spent a total of R660.4 million (US$42.2 million) on free medical costs and medical aid contributions in South Africa in FY20 (FY19: R621.6 million; US$44.4 million). The marginal increase in expenditure was largely due to inflationary increases in the cost of medical-related goods and services, particularly personal protective equipment. The impact of Covid-19-related health costs incurred in the fourth quarter will only be evident in FY21 owing to the normal lag between the date of procurement and expenditure

Covid-19
The first case of Covid-19 in South Africa was officially recorded on 5 March 2020. Firmly understanding that we had a pivotal role to play in arresting the spread of the pandemic, Harmony acted swiftly and proactively. Within less than two weeks - on 18 March - the company had published and was rolling-out a Covid-19 risk management strategy. The aim of the related risk assessment was, and remains, to identify, evaluate and rank the hazards associated with any exposures to Covid-19 and potential infections. It also aimed to reduce the probability of an employee contracting Covid-19 and to limit the severity should they be infected.
The health protocols underpinning the strategy have been aligned with best practice and guided by materials issued by the World Health Organization, the National Institute of Communicable Diseases, the South African Department of Health and the Minerals Council South Africa. They were also informed by extensive and ongoing discussion with our trade union stakeholders.
The preventative measures we put in place included:
Preventative personal hygiene procedures
The compulsory use of preventative personal protection equipment, particularly face masks, in the workplace and especially at the mine and shaft entrance, at crush turnstiles, in the lamp rooms, in shaft conveyances, underground station, and at our various offices
Increased hand washing and social distancing (minimising personal contact, refraining from all unnecessary travel and staying away from social gatherings where there would be more than 100 people) communication and awareness campaigns (for both employees and communities)
Identification, care and counselling of high-risk employees (especially those who have not tested and do not know their TB and HIV status, those on anti-retroviral medicine, those older than 60 and employees with pre-existing medical conditions)
Stressing the identification of symptoms and the urgency of self-isolation if displaying symptoms
Rigorous screening as employees return to work and when at work; and, if employees show Covid-19 symptoms, the testing and treatment of these employees for Covid-19
The establishment of three quarantine sites which can accommodate a total of 448 employees who have contracted Covid-19 or have come into contact with Covid-19-positive individuals, and who are not in need of hospitalisation
Isolating employees who test positive for the virus in one of four specially established and accredited isolation sites - one in Welkom (Free State) with 150 rooms, one in Gauteng with 50 rooms, and two facilities with 60 rooms each in the Klerksdorp area (southern North West Province)
Increased frequency in occupational health visits and inspections by the Department of Health and the Department of Mineral Resources and Energy to monitor Covid-19 compliance
Thermal screening of all individuals who enter our operations, and of employees at all key points
The reduction of the number of workers in a single crew to a maximum of 15 to assist with social distancing while underground
Each employee is given their own hand sanitizer for every shift before going underground
Customising lift shafts and their operation to ensure appropriate social distancing in the cages to reduce the capacity to 75%
Capacity on road transport reduced to 60-70% of licensed capacity
Frequent spraying of waiting areas with disinfectants and the sanitising of all hard surfaces such as handrails, turnstiles and door handles several times a day
Placement of hand sanitisers and additional hand washing stations on surface, at the entrances to all operations and outside the mine at taxi gathering areas and in company transportation
All equipment and machinery is sanitized at the start and end of each shift underground
With the safe resumption of operations at our South African mines during the fourth quarter of the financial year, Harmony conducted its own audits to check that operations were adhering to our Covid-19 standard operating procedure. We also agreed with the trade unions that they may conduct similar safety audits in conjunction with our management teams, to provide them with the assurance that the safety and health of our employees is protected. The Department of Mineral Resources and Energy similarly conducted its own audit and responded favourably to the prevention and mitigation measures we have adopted.

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Despite the extensive preventative measures implemented, the spread of Covid-19 to our employees was an inevitability. The table below provides accurate Covid-19 data at the time the Integrated Annual Report was approved.

South Africa: Covid-19 statistics as at 5 October 2020
Total number of:
 
Employees tested
4 136
Employees testing positive
1 688
Employees recovered
1 535
Deaths
31 (including contractors)

Employee wellness and healthcare
Healthcare delivery
At our South African operations, membership of a medical scheme is compulsory for all category 9+ employees. For category 4-8 employees, membership is voluntary with 8 122 employees participating in medical schemes in FY20 (FY19: 8 202). Harmony subsidised the related costs on behalf of employees by R20 million (US$1.28 million) a month
(FY19: R18.4 million or US$1.3 million). There was a slight 0.7% increase in medical scheme membership between the third and fourth quarters of the year, which could be attributable to the pandemic. The subsidy contribution that Harmony had to pay to allow employees to retain the full benefit of the medical scheme went up by R4 million in the last quarter of the financial year.
In all, 24 789 category 4-8 employees elected not to join a medical scheme. Instead they received in-house comprehensive health services from mine medical health facilities and associated preferred providers at no cost to the employee. The cost of providing these services was R35 million (US$2.23 million) a month in FY20 (FY19: R33.4 million; US$2.4 million). The weaker rand contributed to the increased cost of imported medical supplies.
For those employees who are not members of a medical scheme, there are dedicated health hubs at all our operations, which undertake health promotion and prevention, active case-finding and screening as well as active disease management of chronic conditions. Medical surveillance is conducted at our health hubs for all employees, including contractors. In all, 49 326 medical examinations were conducted in the past financial year (FY19: 53 279), with the decline being largely due to the national lockdown and the Covid-19 pandemic in the last quarter of the year.
A new health hub was opened at Moab Khotsong on 3 February 2020, as part of Harmony’s health strategy to provide comprehensive pro-active healthcare in close proximity to the operation. The purpose of the health hub is to improve healthcare service delivery to employees of the operation. That hub, which is similar to the hubs at our other South African operations, known as the Gateway Medical Hub, is now a one-stop-shop, providing primary and occupational healthcare, on-site pharmaceutical services as well as rehabilitation and functional assessment services. The opening of this new healthcare facility has provided an opportunity for both hostel dwellers and employees staying outside the confines of the Moab Khotsong mine to access a 24/7 medical centre.

Mental illness
Mental illness is a relatively new health-related scourge impacting our business but one that is likely to take a greater toll in the coming years. Research conducted by various global institutions indicates that mental illness in the workplace is on the rise and could increase by as much as 64% in the next few years. Psychosocial illness can be caused by a range of social and financial-related problems confronted by employees daily.
To address this particular problem, in the first quarter of the year we launched the Employee Psychosocial Programme, in partnership with the Reality Wellness Group, for all employees and their immediate family members. This multi-faceted programme offers face-to-face counselling or telephonic advice by qualified social workers and psychologists, as well as financial guidance for those struggling with debt, and legal support for those with legal concerns. The service is available 24/7, 365 days a year in all nine official South African languages. Our employees can access the service by either sending a ‘please call me’ message, using a toll-free number, and/or sending an email. The initial uptake was relatively low, with 211 unique employees engaged and 831 telephonic calls on the hotline in FY20. Adjustment disorder, anxiety and acute and traumatic stress were noted as the top psychosocial risks.
In the third quarter of the financial year, we embarked on the second phase of the project, which focuses on raising awareness among line managers and equipping them with the necessary knowledge to ensure optimal use of the programme. The first group session for line managers was held at Kusasalethu. Regrettably, the training sessions scheduled for our other operations have been postponed owing to the Covid-19 pandemic, however, it is anticipated that they will resume in FY21.
While Covid-19 disrupted the roll-out of the programme, it did serve to underscore the vital need for a strategy to assist our employees in dealing with psychosocial ills. The surge of the Covid-19 pandemic had a significant impact on the psyche of our employees and as a result, in the last quarter of the year, we launched a related programme to address the psychosocial effects arising from lockdown and the quarantine isolation process. Employees who were

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required to quarantine for a 14-day period upon their return to work, were engaged with daily to ensure their mental wellbeing. In addition, focus groups were formed to support some of our healthcare workers during this difficult time. This was particularly noted by our employees as being an invaluable aspect of the care and support provided during the compulsory isolation and quarantining period.

Weight warriors
Excess weight and obesity are challenges with which some two-thirds (20 340) of all Harmony employees have to contend. To encourage positive lifestyle changes, with a particular focus on excess weight and obesity, a weight warrior’s competition was launched in the first quarter of the year. Its aim was to encourage employees to shed a combined total of 120 000kg of fat by the end of the financial year. The initiative was driven by our executive team and 3 416 employees (16.5% of the total workforce) participated in the competition.
The importance of this initiative was underscored in the second half of the year by the spread of the Covid-19 pandemic. Early indications seemed to suggest that excess weight and obesity could increase the risk of hospitalisation and death from Covid-19. Unfortunately, the campaign was not as successful as expected due, in large part, to the enforced lockdown and associated impacts. By the end of the competition, participants had achieved a total net weight loss of 2 331.13kg.
Such is the necessity of reducing excess weight to ensure a more healthy workforce that we will continue this campaign in FY21.

Managing health-related absenteeism
Health-related absenteeism poses a risk to the overall productivity of our workforce. It is for this reason that we have pursued our At work management programme for several years, the objective of which is the early identification of employees who may become chronically ill or medically incapacitated by debilitating diseases, and to manage, review and monitor their medical conditions. While health-related absenteeism remained fairly consistent for the first three quarters of the financial year, averaging 7.5%, there was a significant decrease down to 6.2% in the last quarter of the year (FY19: 7.7%). This was directly linked to the lockdown with some employees working from home and many others not being recalled back to site.
To cater for Covid-related absenteeism, two new health related categories were introduced:
Isolation, which is the separation of employees who are infected and have tested positive, accounted for 0.7% of labour unavailability
Quarantine, which is the separation of employees who might have been exposed, accounted for 0.6% of labour unavailability

Managing occupational diseases
Occupational diseases pose some of the greatest risks to our business. Not only can they have severe health implications for employees who fall ill, they also result in financial liability to the company and reputational damage. Thus, managing and preventing occupational diseases has been, and will continue to be, a priority. Occupational lung disease, noise-induced hearing loss and heat illness are our key concerns

Silicosis
Silicosis is an occupational lung disease caused by the inhalation of free respirable crystalline silica dust over a long period of time. It can also increase susceptibility to TB. Given the severe nature of the risk silicosis poses, Harmony has adopted and follows an integrated silicosis, TB and HIV/Aids policy and programme to responsibly manage the debilitating disease and proactively prevent associated health deterioration.
It is Harmony’s ambition to eliminate silicosis entirely. To achieve this, we have adopted the South African Gold Mining Industry 2024 Milestone. The 2024 milestone for silica dust exposure requires that, 95% of all personal silica dust samples taken must be below 0.05mg/m3 by 2024. In order for Harmony to achieve this target, annual aspirational targets were set to reduce dust loads on an annual basis, and the aspirational target for CY2020 is 92.0%. The milestone compliance for Harmony for CY2020 quarter 2 was 86.3%, with most of the metallurgical plants and a third of the mines above the aspirational target of 92%.
During FY20, 164 cases of silicosis were submitted to the Medical Bureau for Occupational Diseases and 67 were certified (FY19: 204 cases reported and 58 cases certified).

Dust control
As silicosis is caused by the inhalation of free respirable crystalline silica dust over a long period of time, our principle objective is to eliminate, as far as possible, the discharge of dust. Dust discharge occurs during activities where rock is broken at source, such as during stoping, development and trackless mining. Engineering controls to allay dust have

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been implemented or are being rolled out at our underground operations to minimise employees’ exposure to silica dust, including leading practices as advocated by the Mining Industry Occupational Safety and Health (MOSH). Our most recent intervention has been the installation of in-stope atomisers at all operations. By the end of FY20, this initiative was 91.7% complete, with only Moab Khotsong awaiting installation.

Dust levels
The primary source of silica dust remains the activities in which the rock is broken and moved either by means of blasting, stoping, trackless mining, and ground handling. The main strategic thrust of reducing the exposure to crystalline silica dust, therefore, is to ensure that the status and effectiveness of our dust engineering controls is sustainable. Most of these engineering controls are Mining Industry Occupational Safety and Health (MOSH) leading practices for silica dust. In FY20, the progress of implementation of these engineering controls across Harmony’s operations was as follows:
Main tips - tip foggers (98.8%), tip covers (88.4%) and tip filters (92.7%)
Main intake haulages - airway sprays (100%), spray cars (94.9%) and footwall treatment (67.3%)
Stopes - winch covers (98.9%) and stope atomisers (85.8%)
Continuous real time monitors (92.7%)

Tshiamiso Trust
While Harmony is pursuing all possible initiatives to limit dust and prevent employees from contracting silicosis, there is a significant legacy that still must be addressed. In 2019, South Africa witnessed a historic milestone in its narrative of occupational lung disease. On 26 July 2019, the Johannesburg High Court approved the R5.2 billion settlement of the silicosis and tuberculosis class action suit between the Occupational Lung Disease Working Group - representing Gold Fields, African Rainbow Minerals, Anglo American SA, AngloGold Ashanti, Harmony and Sibanye-Stillwater - and lawyers representing affected mineworkers. Following the conclusion of the Court-ordered three month opt-out process the settlement agreement became effective on 10 December 2019.
The settlement provides meaningful compensation to eligible claimants across southern Africa who carried out risk work between 12 March 1965 and 10 December 2019 at any of the 82 gold mines listed in the settlement agreement, and who have contracted silicosis or work-related tuberculosis, or to their dependants where the gold mineworker has passed away. A condition of the settlement was the establishment of a trust to carry out the terms of the settlement agreement and to manage the compensation process.
The Tshiamiso Trust (a Setswana word meaning “to make good” or “to correct”), which is in the process of establishing its operations and appointing senior management members, will facilitate the tracking and tracing of the settlement agreement class members and administer claims and payments to eligible claimants or their beneficiaries.
Harmony was a central player in the settlement negotiations and actively involved in the establishment and registration of the Tshiamiso Trust. Moreover, Harmony has made provision to contribute R892 million towards the court approved gold mineworkers’ class action silicosis settlement.
The Covid-19 pandemic has had an impact on the requirements of the Tshiamiso Trust Deed by restricting the Tshiamiso Trust’s capacity to conduct medical benefit examinations and is also not able to carry out lung function tests at this time to minimise the spread of the Covid-19. Under these circumstances, the Trust has been limited to considering processing claims of eligible claimants who have existing silicosis and TB claims with the Medical Bureau of Occupational Diseases.
However, owing to the onset of the Covid-19 pandemic, the Trust has been severely hampered in its ability to become fully functional and effective. Medical experts and authorities, in South Africa and elsewhere, have advised that lung function tests should not be carried out at this time. Under these circumstances, the Trust has been limited to considering claims from individuals who have existing medical records.

Settlement of outstanding occupational lung disease claims
Harmony has taken a lead role in assisting the Medical Bureau of Occupational Diseases address the severe backlog in occupational lung disease compensation claims in support of Project Ku-Riha, launched by the Department of Health in 2015. In facilitating the settlement of claims due to eligible current and former Harmony mineworkers, the Harmony ReConnect department has developed various initiatives to track and trace mineworkers and, in addition, to provide operational support and resources where appropriate.
In FY20, Harmony facilitated the settling of 2 200 occupational lung disease claims to the value of R43 million, bringing the total number of settled claims to approximately 12 800 and total value of R245 million paid to Harmony current and former miners since October 2015 from the Occupational Diseases and Works Act Commissioner’s Fund.
Harmony and its mining industry peers have collaborated with the Minerals Council South Africa to establish a co-governance model between the Department of Health and the Minerals Council South Africa which will contribute to

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the funding and oversight of projects to improve the operations and performance of the Medical Bureau for Occupational Diseases and the Compensation Commissioner for Occupational Diseases.

Noise management - eliminating noise-induced hearing loss
Harmony aims to adhere to the Occupational Health and Safety Milestone on the Elimination of Noise-Induced Hearing Loss requirement that no employee’s standard threshold shift will exceed 25 decibels from the baseline when averaged at 2 000, 3 000 and 4 000Hz in one or both ears. The standard threshold shift, a sensitivity marker used to identify early deterioration in hearing, guides the modification and enhancement of occupational noise controls to prevent progression in hearing loss.
All Harmony employees who are exposed to high noise levels are given personalised hearing protection devices, which reduce noise levels by 25 decibels.
However, a concerning trend noted in the past year was the greater number of employees compensated for noise-induced hearing loss - 80 cases were compensated in FY20 versus 62 in FY19. The Tshepong operations, Doornkop and Kusasalethu accounted for most of these cases.
One notable achievement, however, was the adoption of the tyre-deflation noise reduction simple leading practice. The Mining Industry Occupational Safety and Health (MOSH) adoption team trained each of our occupational hygienists and equipped them with the necessary knowledge and resources to drive implementation of this practice at our South African operations.

Managing underground temperatures - limiting heat stress
Extensive refrigeration and ventilation measures are in place at all operations where temperatures exceed normal working ranges. Heat-tolerance testing, acclimatisation programmes, and the provision of adequate hydration and support protect employees exposed to excessive heat in the workplace.
In FY20, 17 654 heat-tolerance tests were conducted with 78 cases of heat-related illness reported (FY19: 22 157 tests and 88 cases). The regression in the number of tests was largely due to the lockdown during the fourth quarter of the financial year. Most cases can be attributed to dehydration. Environmental working conditions are monitored continuously.

Radiation protection
Radiation levels and radiation exposure are monitored at all our South African operations. The dose limits are 50 millisievert a year and 100 millisievert over five years. All operations comply with these limits. Operational controls ensure that elevated monitoring results are investigated and corrected when necessary. Radiological clearances are conducted at decommissioned sites to ensure the future declassification of these areas.

Managing chronic diseases
HIV/Aids
HIV/Aids is one of South Africa’s most severe and devastating health scourges. Despite the significant progress made in raising awareness and prevention, as well as the national roll-out of anti-retroviral therapy, the epidemic continues to significantly impact our employees and their dependants. What is of particular concern to Harmony is that, if left untreated, the disease can lead to higher levels of opportunistic co-infections, which results in increased absenteeism and reduced performance levels, loss of skills, greater economic burdens on family members, and sometimes death, more so during the Covid-19 pandemic.
However, motivating employees to confirm and/or disclose their HIV status, despite perceived stigma and confidentiality issues, remains a challenge. Initiatives such as positive behaviour programmes are pivotal in this regard. At our South African operations in FY20, 9 125 employees (FY19: 8 947) were identified as HIV-positive and 7 980 (FY19: 8 024) are on the HIV/Aids programme and receiving anti-retroviral therapy.
A notable milestone in our fight against the HIV/Aids epidemic in FY20 was the introduction of the drug Dolutegravir as part of our first line treatment regimen. This drug suppresses the HIV virus much faster and has fewer adverse side effects. Its roll-out to our HIV positive patients, which began in the first week of September 2019, is in line with the Department of Health’s latest abridged HIV/Aids guidelines. To support the roll-out, all our clinicians, including doctors, nurses, pharmacists and social workers attended training on the new guidelines.
It is anticipated that the roll-out of Dolutegravir will greatly assist South Africa in achieving the United Nations Programme on HIV and Aids (UNAids) 90-90-90 targets. This is a global campaign to which Harmony has aligned its HIV/Aids programme.


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The campaign seeks to achieve the following targets by the end of 2020:
90%
Target
Harmony status (South Africa)
 
FY20
FY19
Of all people living with HIV will know their status
83%
82%
Of all people with diagnosed HIV infection to receive sustained anti-retroviral therapy
85%
88%
Of all people receiving anti-retroviral therapy to have viral suppression
71%
73%

Again, the Covid-19 pandemic has affected progress being made - for example, just prior to the start of the lockdown,86% of people living with HIV knew their status. This, subsequently fell to 83% for the year on account of the fact that we had reduced access to a large percentage of our workforce.

Voluntary counselling and testing for HIV/Aids
Pre-test counselling and voluntary testing are offered to all employees through ongoing interventions at all Harmony healthcare hubs. In all, 45 005 (FY19: 38 737) employees received voluntary counselling and testing during the year and, of these, 42 804 (FY19: 31 869) confirmed their status.

Tuberculosis
Alongside HIV/Aids, tuberculosis (TB) is the other most pressing chronic disease concern confronting our healthcare team. More so given the fact that the TB incidence rate at our South African operations remains high compared with World Health Organization and national benchmarks.
To address this, we have resolved to proactively reduce the rate of TB incidence per 100 000 employees at our South African operations to below the national TB incidence level by December 2024. Harmony’s TB control programme, which is aligned with the relevant guidelines and prescriptions of the World Health Organization, and with the National Strategic Plan to combat TB, focuses on contact tracing, comprehensive screening, testing, hospitalisation of infectious cases and a directly observed therapy short course. Additionally, we have implemented a TB prophylaxis programme in which 6 404 high-risk employees have been enrolled to date.
Of this number, 4 134 employees had completed the course by the end of FY20.
This programme is bearing fruit as the overall group TB incidence rate continued its downward trend in FY20 with a further reduction of 19% year on year. In FY20, 34 815 employees (including contractors), or 93% of the workforce, were screened for TB, exceeding the 90% target set by the Minister of Health (FY19: 37 666 and 99%). The lower numbers are due to the national lockdown in the last quarter of the financial year. A total of 101 cases of TB were certified in FY20 (FY19: 102).

Lifestyle diseases
Non-communicable chronic diseases, including hypertension, heart disease and diabetes, continue to pose a significant challenge for our employees.
Specific initiatives have been implemented to manage chronic diseases with particular focus on HIV/Aids, TB, diabetes and hypertension. In FY20, the percentage of employees at our South African operations with a chronic condition remained unchanged at 61%. Of the 19 294 employees diagnosed with chronic conditions, 33% have hypertension, 10% diabetes and 47% HIV/Aids.

Papua New Guinea
An analysis of our healthcare strategy in Papua New Guinea during FY20 follows a similar pattern to that in South Africa: while we maintained our focus on providing all the primary healthcare and occupational health surveillance needs for our employees and contractors in the first nine months of the financial year, in March 2020, we were compelled to shift our attention almost entirely to addressing the Covid-19 pandemic. Total expenditure on medical and healthcare in Papua New Guinea amounted to R18.849 million (PG34.118 million) in FY20 (FY19: R15.784 million; PGK3.733 million), this excludes the PGK9.8 million (R44.917 million) spent on managing Covid-19 (see below for more information).


Primary healthcare

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In Papua New Guinea, all primary healthcare needs and occupational health surveillance are provided to our employees and contractors through medical centres situated at Hidden Valley and Wafi-Golpu. The medical centres are staffed by a team of full-time doctors and nurses who work on a site according to a 14-day roster. We use medical registers, which are stored on an online database, to track and review each patient’s progress from their first visit through to final treatment. Our medical centres are equipped to deal with most work and non-work-related illnesses and diseases.
In all, 20 452 health examinations were conducted at our medical centres during FY20 (FY19: 17 601) of which 3 304 (FY19: 3 515) were random drug and alcohol tests.

Tuberculosis and HIV/Aids
Upper respiratory tract infections are our main medical concern in Papua New Guinea, a function of the humid climate. These infections include TB. To effectively manage this chronic disease, we have installed a digital X-ray machine, a polymerase chain reaction (PCR) machine and a medical laboratory to accurately diagnose TB and other tropical diseases. In FY20, 1 905 employees were treated for respiratory ailments (FY19: 2 191). The emphasis on hygiene - regular hand washing and the wearing of masks - in combating Covid-19 helped contribute to the decrease in upper respiratory infections.
In terms of HIV/Aids, 79 employees were voluntarily tested and given counselling during the year at Hidden Valley, compared to 70 individuals in FY19.

Occupational health - noise management
Given the use of large mining vehicles and earth moving equipment, Hidden Valley can be a particularly noisy environment. To mitigate this, we have implemented a programme for noise monitoring and we ensure that our employees wear the correct hearing protection devices at all times.

Lifestyle diseases and mental health
However, in FY20 it became evident that there is a rising trend in the number of employees and contractors suffering with lifestyle diseases. Chronic heart disease, hypertension and diabetes rank as the most common ailments. In addition, there has been a concerning rise in the number of mental-health related problems.

Malaria
Malaria is endemic in many parts of Papua New Guinea. While it does not necessarily affect the Hidden Valley operation itself, owing to its high altitude, it does pose a risk to employees, contractors and communities residing in the valleys below where the disease runs rampant. It is also a risk for our Wafi-Golpu employees and contractors.
In 2019, a total of 256 people were diagnosed with malaria, representing a 19% decrease compared to 2018. However, the vast majority of these patients experience only very mild symptoms. Our community health projects play a vital role in combatting the disease, particularly as it has a high mortality rate among young children.
Several malaria management programmes are in place in our communities at Wafi-Goplu. These include malaria awareness and education campaigns and the distribution of mosquito nets to households, particularly those with young children.

Community health initiatives
Ensuring the health and well-being of our communities is also a focus area for our healthcare team in Papua New Guinea. To this end, we run a community health outreach programme, which is led by our medical department and a health extension officer. Conditions endemic to our communities result in assessments and engagement with community health providers around obstetrics training, monitoring of upper respiratory health, malaria prevention, and working with the Papua New Guinea Department of Health on polio and cervical cancer vaccination programmes.
Other medical assistance we offer the community includes emergency transport and transfers to health centres in Bulolo and Lae. Harmony has also distributed hospital beds donated by Rotary Australia to four health facilities in the Hidden Valley area, and we contribute to power running costs at local hospitals’ community agricultural programmes.
A particular focus of our community outreach programme in FY20 was a measles vaccination programme concentrating on employees and three of our host communities. While the programme was launched in the third quarter of the year under review, it had to be suspended owing to the outbreak of the Covid-19 pandemic.


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Covid-19 in Papua New Guinea
The first case of Covid-19 was officially recorded in Papua New Guinea on 20 March 2020. In response, the Government declared a state of emergency, which took effect four days later. While the state of emergency was only supposed to be in place for 14 days, it was extended on a rolling basis until it was finally allowed to lapse on
16 June. A state emergency controller was subsequently appointed to protect the interests of Papua New Guinea in relation to the global pandemic and ensure international restrictions are still in place.
While Hidden Valley was placed under lockdown, it was allowed to continue operating during the Covid-19 state of emergency. All non-essential staff were removed from site and certain activities and expenditures curtailed to focus on safe, profitable operations during the pandemic. Protocols were developed to allow the safe movement of personnel to and from site during this period. The delivery of essential supplies to the mine also continued, with strict isolation control measures in place.
To ensure we continued operating in the safest possible manner, Harmony created a Covid-19 management plan and supporting Covid-19-related care and management plan. Additional workplace protection controls were implemented to ensure safe operations continued at Hidden Valley including the following:
Preventative personal hygiene measures - regular hand washing and social distancing - accompanied by focused employee communication campaign
Compulsory use of preventative personal protection equipment - face masks, gloves - in the workplace
Compiled longer, fatigue-friendly work rosters to reduce the possibility of on-site exposure
Regular temperature checks
Sanitisation and cleaning of high-risk areas including transport
Ongoing employee and community hygiene awareness campaigns
Restricted overseas travel
Removal from site of non-essential and high-risk personnel
The most successful measure, however, has been the national Covid-19 screening facilities in Wau, Bulolo, Lae and Port Moresby for all personnel entering Hidden Valley. All Hidden Valley employees and contractors have been required to present themselves for screening at any one of these sites before entering the site. These entry point facilities have been equipped with PCR machines specifically designed to test for Covid-19. This screening is a three-stage evaluation process:
Stage 1 - questionnaire
Stage 2 - rapid Covid-19 test
Stage 3 - full clinical polymerase chain reaction test
Such consistent testing, in combination with our strictly enforced preventative measures, has meant that, as of the end of FY20, only one case of Covid-19 had been reported on our Papua New Guinea sites. So successful have these measures been that they will continue into FY21 and will remain in place for as long as the pandemic persists.

OUTLOOK
For both South Africa and Papua New Guinea, the focus for much of FY21 is expected to remain on managing the Covid-19 pandemic until a suitable vaccine is found and widely distributed. However, we will continue to prioritise our other healthcare initiatives, particularly those relating to occupational and lifestyle diseases.


EMPLOYEE RELATIONS
INCLUSIVE AND DIVERSE
The success of our business is ultimately determined by the productivity of our workforce - our human capital. It is only with the assistance of a motivated and productive workforce that we are able to deliver on our business strategy and facilitate the creation of sustained and shared value for all our stakeholders.
For this reason, we respect and value our human capital as one of our most important assets and strive to maintain a sound and trusting relationship with employees. Moreover, we have in place all necessary mechanisms to ensure our workforce is equipped with the right skills and knowledge required to achieve our strategic objectives.


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ex15iar20capitalsaffected.jpg
OUR APPROACH TO EMPLOYEE RELATIONS
Our approach to employee relations is premised on the firm belief that each employee is critical to our business strategy and should be engaged with on a basis of mutual respect and trust. Moreover, we believe that each employee should be provided with the opportunity to develop to their full potential, so they are both motivated and productive in their work tasks. We provide training and development, promote fair labour practices for employees and contractors, and encourage local employment opportunities. Employee safety and well-being is also central to our approach to ensuring positive employee relations. For more details, see Safety and health.

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Our approach to employee relations is geared towards:
maintaining and upholding the principle of fairness and following our equity employment policy and practice through personalised development and training to empower individuals to contribute to the company and society in general
recognising and capitalising on the rich diversity of our people while continuously ensuring that local communities have preferential recruitment opportunities
aiming to return benefits through our employee shareholder schemes in South Africa
where Harmony is expanding its geographic footprint,
ensuring that we respect the customs, traditions and needs of the local people
ensuring freedom of association for all employees and recognising the value of organised labour to business improvement
GOVERNANCE
Our employment policies, procedures and practices take into account and comply with relevant labour legislation in South Africa and Papua New Guinea. They are also aligned with the guidelines of the International Labour Organization. Recruitment initiatives focus on local communities in both countries. All human resource procedures and policies, including remuneration and incentive schemes, are reviewed regularly.
Contributing to the SDGS:
Ensuring a stable, engaged and productive workforce is important in helping delivery on our strategic objectives. We aim to be a fair and responsible employer, promoting inclusivity and equality. Our human relations strategy contributes directly to SDGs 5 and 8, which target and promote gender equality, decent work and fair and responsible pay and benefits.
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GENDER EQUALITY
ex15iar20employee_image9.gif
DECENT WORK AND ECONOMIC GROWTH
    In recent years, gender equality has become an increasingly important aspect of our human resources policy
    Gender diversity targets are in place and we are actively engaged in increasing the number of women employed across the company, at all levels. A particular focus is women in mining – in South Africa and increasingly in Papua New Guinea
    As a responsible employer, providing decent work includes ensuring that everything possible is done to safeguard employees, ensure that workplaces are safe and to prevent injury or harm so that employees return home, safe and well
    Employees have the right to refuse to work when they consider a workplace unsafe
    Training and other support are provided to encourage safe behaviour and conduct

For more information on our contribution to the SDGs, see Our sustainable development framework.

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Our performance FY20
Key human resource metrics - FY20
South Africa
Papua New Guinea
Employee characteristics
 
 
Total workforce
37 343
2 371
Historically disadvantaged persons* (South Africa) / local (Papua New Guinea)
 
 
- Total workforce (%)
71
96
- Senior management (%)
55
**14
Female employees (%)
15
14
Employee turnover (%)
6
11
Employee remuneration
 
 
Employee wages and benefits paid (Rm)
11 300
369
Ratio of minimum wage to average wage paid (%)
56
2.5
Training spend per employee (R)
12 910
16 708
  * Includes women
** Harmony South-East Asia executive committee, excluding joint ventures and operations 
 
 

Workforce profile
Region
Permanent employees
Contractors
% of employees drawn from local communities
 
FY20
FY19
FY18
FY20
FY19
FY18
FY20
FY19
FY18
South Africa 1
31 502
31 201
32 520
5 841
6 159
5 951
76
79
75
Papua New Guinea 2
1 589
1 675
1 397
782
738
818
96
96
96
Harmony - total
33 091
32 876
33 917
6 623
6 897
6 769
 
 
 
1 Includes all South African underground and surface operations
2 Excludes employees of the Wafi-Golpu joint venture

South Africa
In FY20, our South African workforce complement remained relatively consistent at 37 343 (FY19: 37 360). Of this number, 80% are South African nationals - 76% from local communities and 4% from the Eastern Cape. The remaining 20% are drawn from neighbouring countries, primarily Lesotho and Mozambique.
Employment equity and gender diversity
We have long been driven by the need to create and maintain a workforce that accurately represents the diversity of the South African population. Not only does this make us a good corporate citizen, in the South African context, it also ensures compliance with the employment equity targets of the Mining Charter. These targets, which have been a feature of South African business for more than two decades, are intended to facilitate the creation of workplaces that are more accurately representative of the broader demographics of South Africa. They are also aimed at redressing the historical legacies in employment, particularly at managerial levels, experienced by certain population groups and women.
To ensure compliance with the employment equity targets gazetted on 27 September 2018, Harmony implemented a range of initiatives to accelerate the representation of historically disadvantaged persons (HDPs) across the spectrum of managerial positions, and to ensure greater gender diversity in the business. These initiatives have born fruit as evidenced by an analysis of our year-on-year performance. HDP representation in all managerial positions increased except at executive management level. In FY20, HDP representation in management increased to 64% (FY19: 62%).
While we have made progress in meeting overall HDP managerial targets and, in some cases, have exceeded these targets, we made less headway in achieving our gender diversity objectives. By the end of FY20, 15% of our total workforce, including contractors, were women, which is unchanged from FY19.
The representation of women exceeded the Mining Charter targets at board, top and senior management levels, but under achieved at middle and junior management levels. However, collectively, the representation of women in

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management just meets the Charter targets, which presents the risk that, should we lose any of our female managers for some reason, we would fall short of the target. To mitigate this risk, we have drafted a five-year plan to substantially increase the representation of women at managerial level.
Harmony’s efforts in supporting and driving gender equality have been internationally recognised with our continued inclusion in the 2020 Bloomberg Gender-Equality Index (GEI), which tracks the financial performance of public companies committed to supporting gender equality through policy development, representation and transparency.
The other area that still requires considerable improvement, is the employment of people with disabilities. In FY20, employees with disabilities accounted for 0.4% of the workforce, falling far below the 1.5% target stipulated. However, the nature of our operations and challenging working environments have added complexity to achieving the target. An external consultant has been engaged to assist in the definition of disabilities in the workplace so that we are better placed to implement initiatives to ensure that we make progress in meeting this target in FY21.
Gender-based violence campaign
The abuse of women and children is one of the most prominent scourges confronting South African society today. While gender-based violence is not a notable problem within Harmony itself, we do believe it to be our moral obligation to support the country’s fight to address this social evil. It is against that backdrop that, we launched an employee awareness campaign on gender-based violence in June 2020. Anti-gender-based violence messaging was conveyed through printed posters, videos and verbal discussion, particularly in our induction programme. In FY21, Harmony plans to survey all employees and to host online sessions with women in mining forums at all operations to gather feedback on the impact of this campaign and to determine areas of improvement.

Mining Charter III: employment equity performance by category as at end June 2020
 
Historically disadvantaged persons 1
Women
Occupation category
Target (%)
Actual (%) FY19
Actual (%) FY20
Target (%)
Actual (%) FY19
Actual (%) FY20
Board
50
65
67
20
24
28
Executive management
50
58
50
20
32
25
Senior management
60
52
55
25
28
29
Middle management
60
52
53
25
23
23
Junior management
70
63
65
30
17
18
Core and critical skills
60
68
70
N/A
N/A
N/A
Persons with disabilities
1.5
0.4
0.4
N/A
N/A
N/A

1 Historically disadvantaged persons include women and exclude white males and foreign nationals


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Impact of Covid-19 in South Africa
The spread of the Covid-19 pandemic to South Africa in March 2020 had a significant impact on our business, not least from a labour profile perspective. Level 5 of the nationwide lockdown that was implemented on 26 March and endured until 16 April compelled the suspension of all mining and processing activities. Only emergency services, and care and maintenance staff were allowed to continue working. This meant that most of our employees had to return to their homes until we could resume operations.
In May 2020, as part of the phased reopening of the economy, the mining industry was permitted to operate at a reduced capacity of not more than 50%; and in June, the industry was permitted to resume operating at 100% capacity. However, the ramp-up was hampered by bottlenecks in the official permitting process that was required to allow our employees to travel inter-provincially to return to work. The ramp-up was further inhibited by the Covid-19 preventative measures, which required all our returning employees to be quarantined for 14 days before they could rejoin the workforce.
The greatest challenge brought about by the state of disaster and national lockdown, however, was the absence of our 5 000-strong foreign miner complement. The closure of South Africa’s borders meant that our foreign miners who had been compelled to return home when lockdown level 5 was imposed were unable to re-enter the country and return to work. Most of our foreign miners - the majority of whom are from Lesotho and Mozambique - are highly-skilled and their absence of these skills had a noticeable impact on our operations. At the time of writing, most of our foreign miner complement had returned safely to work.
Such has been the impact on our labour force that, during the last quarter the financial year, Doornkop, Joel, Kusasalethu, Masimong, Moab Khotsong, Tshepong and Unisel operated with less than 50% of their workforce complement. Moab Khotsong was the most impacted having just 40% of its workforce on site in the last quarter. More significantly, given the disruptions to our operations, particularly with our foreign employees prevented from returning to work, and our local employees having to isolate and quarantine before resuming their posts, all of our existing mining teams had to be broken up and 700 new mining crews were formed across all of our operations. Each of these new mining crews were assigned new supervisors and new working places, all while we made every effort to manage all safety hazards.

Papua New Guinea
There was a marginal decrease in the total employee complement to 2 371 (FY19: 2 413). Currently, 96% of employees at the Hidden Valley operation are local, drawn from Hidden Valley’s host communities, with the remaining 4% being foreign nationals. In this regard, we are in line with Prime Minister James Marape’s aim to increase the employment of Papua New Guineans, particularly in the mining sector. For many years, we have focused our efforts on attracting and retaining locally-recruited employees, particularly landowners and citizens, and we will certainly maintain this momentum going forward.
Gender diversity
The proportion of women making up our employee complement remained steady at 14% in FY20. At management level, 5% are women. Promoting the employment of women was a particular focus at Hidden Valley in the past year, and a concerted drive was to employ, train and develop women as haul truck operators, and by year end, 25% were women, with 46% of the operators of some of the smaller haul trucks being women. To accommodate more female employees, we are providing additional, gender-specific accommodation and running awareness campaigns to promote gender equality and combat gender-based violence.
Our target is to ultimately employ equal numbers of men and women. The progress made in increasing the number of female truck operators has been good despite an entrenched patriarchy in the Papua New Guinean culture, with most

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men believing a woman’s place is at home. This has certainly posed a challenge for us as a business, but there are signs of incremental change and a growing acceptance of female colleagues at Hidden Valley.
Skills development and learning
Skills development, training and talent management are about far more than providing opportunities to employees to achieve their full skills potential. They are a social and business imperative to address dire skills shortages and to address legacies of absent or skewed educational and training opportunities.
All employee training and skills development programmes are aligned with Harmony’s strategic and operational needs. They are designed to enable our employees to acquire the necessary skills, resources and motivation to ensure optimum performance and productivity.
South Africa
In the South African context, Harmony is required, as per the stipulations of Mining Charter III, to spend 5% of our total annual payroll on the essential skills development of employee and communities. Regrettably, we were compelled to place most of our training and development initiatives on hold in March, owing to the impact of Covid-19, and so were unable to fulfil all our commitments for FY20. This, in turn, has meant we have fallen short of meeting the Charter targets for FY20.
All incomplete training programmes have been postponed to FY21.
In FY20, 95% (FY19: 93%) of our South African workforce attended training and skills development, amounting to R458 million or US$29 million (FY19: R484 million or US$34 million). This included South African-based research and development initiatives in exploration, mining, processing, technology efficiency, beneficiation and environmental conservation. A further 81 (FY19: 109) individuals employed in critical positions attended training.

Impact of Covid-19 in Papua New Guinea
The impact of the Covid-19 global pandemic wrought considerable change to our working conditions and operating structure at Hidden Valley. The initial lockdown was for six weeks. The first case of Covid-19 in the country was an employee, who was tested within the country and then flown out. Immediate measures were taken to address the possible spread of the disease and the fear and anxiety caused. We began an employee education campaign and contract tracing, which returned negative test results, and management and the employees representative committee working closely together. The measures taken were successful in preventing the spread of the disease on site and protecting employees. See Safety and health for further information on the measures taken.
Operationally, to effectively manage the impacts of the pandemic, we amended the site rosters for Hidden Valley. Local employees were placed on a six week on, three weeks-off roster, while our international employees were moved to an eight weeks on, four weeks off roster. Both rosters were designed to include time for necessary screening and quarantining before arrival at the mine site (prior to the pandemic, most employees worked according to a 14-day roster with seven days on and seven days off).
This change was implemented with a high level of acceptance among employees. However, there is understanding that such long shifts will place strain on our employees, as a result of fatigue and longer periods away from home. We have put in place several initiatives to mitigate the inevitable fatigue and mental strain, including internal breaks during the week and the construction of a baseball field for some leisure activity on site.




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The various training and skills development programmes conducted by our South Africa operations are summarised below:
Leadership development
Initiated in FY18, the leadership development competency framework is part of the initiative to improve organisational efficiency and innovation and includes training and development programmes aimed at improving leadership effectiveness across all levels, from supervisory to executive level. The total intake for this programme for calendar year 2020 had been an anticipated 330 employees. While 90 employees enrolled in February, the remaining 240 enrolments were deferred on the announcement of the Covid-19-related national lockdown. A breakdown of the management categories who participated is as follows:
• Senior and executive - 3
• Middle and senior - 12
• Emerging and junior - 29
• Team leadership and supervisory - 46
It is anticipated that these employees will complete their training between October and December 2020.
New intakes were anticipated to resume in January 2021.
Engineering training
There are 255 engineering-focused learners in all, with strong HDP representation, in our training development pipeline. Of these, 218 of these learners were still active in the programme in FY20. In addition, seven junior engineers and one certificated engineer are in training at various phases of the development pipeline.
Mining training
In FY20, 39 learner miners successfully passed the blasting board exams and were assigned to various production roles.
The Department of Mineral Resources and Energy has been unable to conduct examinations since the end of February 2020.
Our mining training programme was similarly impacted by Covid-19. When training was suspended at the end of March 2020, the 83 new learner miners who had enrolled at our Welkom Education Training And Development Centre and the Vaal River Gateway training centres were recalled to their respective operations until training could be resumed. Legal and initial training in production support continues on the operations with Covid-19 protocols in place.
Adult education and training
Following the strategic review on the phasing out of adult education training level 4 of our full-time adult education and training programme, there has been an increase in own-time and part-time learning registrations, from 57 in
2019 to 98 in 2020, an increase of 72%. Full-time classes are still offered at pre-adult education training up to level 3 with 117 registrations in all. The average pass rate improved to 73%, from 65% reported for FY19. However,
current learner examinations have been put on hold due to the national lockdown and have been rescheduled for September 2020. Discretionary grants allocated by the Mining Qualifications Authority (MQA) for adult education training for the year ended 30 June 2020 amounted to R1.3 million.

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Bursary programme
On completion of their studies, student bursars can apply for Harmony’s graduate development bursary programme. In all, 73 bursaries (FY19: 81) were awarded to students studying at tertiary institutions, with 14 of these being for core disciplines and the remainder for non-core discipline bursaries. Ten of the 73 bursaries were awarded to the Free State Top 100 achievers which exceeded our normal bursary allocations. The majority (97%) of the bursaries were awarded to students from host communities. Currently, online contact sessions are being conducted with bursar students to offer support and encouragement during these unprecedented times and they are completing online assessments instead of actual written examinations at the various institutions. Results will only be available in the next quarter to track the pass rate.
Mathematics, science and language enhancement project
In recognition of the need for learners to achieve excellent results in mathematics and physical science, and the important role teachers play, Harmony has pioneered various initiatives since 2010. In FY20, R2 million was allocated to the Welkom Department of Education District’s mathematics and science intervention programme. This is in addition to the current mathematics and science school projects, underway at Matlosana and Moqhaka, that Harmony supports. This is a three-year learner support programme aimed at accelerating the mathematics and science performance of grade 10, 11 and 12 learners in township and rural areas to enable them to qualify for careers in the spheres of professional science, technology, engineering and mathematics. These learners attend extra mathematics and science tuition on Fridays (after school), Saturdays, Sundays and public holidays and during the school holidays as well. A total of 80 (40 Matlosana and 40 Moqhaka) grade 12 learners are registered.
Graduate development programme
In order to ensure alignment of current talent development plans with future leadership needs, Harmony has committed to providing a graduate development programme for sponsored bursars studying in the fields of mining, surveying and geology. Six graduates, of whom four were women, participated in the programme in the 2019 calendar year.
Study assistance programme
In FY20, Harmony provided R1.7 million in study assistance to support 102 employees undertaking various courses, diplomas and degrees.
Social plan programme
We continue to provide alternative skills training to employees, current and retrenched, through our social plan programme, which was facilitated by the framework agreement between Harmony and NUM in 2003. This training enables people to remain economically active beyond mining, cushioning the economic impact of unavoidable retrenchments or the loss of employment when mines reach the end of their lives.

Addressing employee over-indebtedness
Financial over-indebtedness is, unfortunately, a burden born by many of our employees at our South African operations. It is a personal stress that has the potential to cause mental strain and impact productivity. Since 2013, Harmony has provided a financial literacy programme for our employees, focusing in the main on lower categories (semi-skilled and skilled employees), to enable them to better manage their personal finances.
While the programme was suspended in the last quarter of the financial year, owing to the national lockdown, we were able to successfully train 1 131 employees in FY20. This brings the total number of employees to 23 989, or 76% of the workforce, who have attended financial counselling since the inception of the programme (FY19: 23 181). Harmony spent approximately R3.5 million on this programme in FY20.
The process to verify all new emolument attachment orders (garnishee orders) before processing them through payroll has also yielded favourable results for employees and the company. In FY20, 144 emolument attachment orders were assessed, and 138 employees accounts were restructured resulting in monthly instalment reductions of R154 000. It also helped to facilitate a R53 000 per month debt write-off by creditors and to-date, removed negative listings from

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the credit bureaus amounting to R308 425. This improved the credit rating of employees and allowed them to qualify for mortgages and vehicle financing. The total number of employee with garnishee orders had declined to 1 386 by the end of FY20.
Papua New Guinea
The sustained underinvestment in technical training facilities in Papua New Guinea, dating back to the 1970s, has resulted in a considerable dearth of adequate technical skills, particularly those needed for the mining sector. As a result, our workforce training initiatives there predominantly focus on providing local recruits with the necessary skills required for our Hidden Valley operation. They also focus on career path training to advance the skills set of all our employees.
In FY20, 1 570 employees in Papua New Guinea attended training and skills development, amounting to R24 million (US$2 million).
Owing to the impact of Covid-19, we were compelled to suspend all close-contact-type training activities.
Our training initiatives encompass the areas of:
career path development
production
safety compliance
National Training Accreditation Council compliance
professional development
computer software
supervisor development
Our communities - training and development
Investing in community skills development is a key aspect of our socio-economic development approach and of leaving a positive and lasting legacy in our communities. Considerable time and effort is dedicated to identifying community members who could benefit from bursaries, work experience, internships and learnerships. Priority is given to students residing in our host communities.
Our community skills development initiative is aimed at upskilling members of the community surrounding our operations. It creates a pool of trained community members who can be called on to fill appropriate vacancies at our operations.
The Welkom community training initiative was launched in FY18. The first intake of 60 youths from local communities have all been transferred to various Free State operations for the competence portion of initial training. In FY19, 147 youths were trained, with 97% (143) taking up permanent mining positions at our Free State various operations.. In FY20, 60 learners were enrolled. The programme will be completed once training has been resumed. A similar programme was conducted in Matlosana (Moab Khotsong), where 98 youths were trained in FY19.
Freedom of association, labour disputes and strikes
All our employees and contractors have the right to freedom of association, and we strive for honest, two-way discussion. In fact, Harmony recognises the value organised labour elicits on improving our business. The employee relations policy framework formalising labour union organisational recognition rights at each operation was implemented in FY19. This is only applicable to our South African operations as there is no union representation in Papua New Guinea.



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South Africa
At our South African operations, Harmony recognises five labour unions with representation in FY20 as follows: NUM 58% (FY19: 58%), AMCU 23% (FY19: 24%), UASA 5% (FY19: 6%), Solidarity 3% (FY19: 3%) and NUMSA 5% (FY19: 4%). Some 6% (FY19: 5%) of employees did not belong to a union. Our multi-union environment promotes co-existence, inclusion and collaboration.
Engagement with unions
Our engagement with organised labour is undertaken with a view to maintaining peace and stability in our operations at all times. To mitigate the risk of labour disputes, we engage frequently with organised labour at mine and management level, in addition to direct engagement with employees. We are proactive in addressing employee and union queries through established structures and processes. In addition to quarterly regional meetings with unions, we also encourage proactive and robust engagement to address particular issues.
As communication is ongoing at all levels, we are in daily contact with full-time stewards through our general managers and human resources leaders who interact regularly at union branch level and with shaft committees. Our regional managers hold regular meetings with regional union structures.
A notable feature of FY20 was that it was a year with no strikes. There were 145 disputes referred in FY20, of which 29 were found in favour of the applicant.

ex15iar20unionrepresentation.jpg
Papua New Guinea
We engage continuously with all stakeholders, including employees, contractors, and national, provincial and local government, as well as landowners and regulators.
There are no active unions at Hidden Valley where industrial relations is currently overseen by an employee representative committee. Wage increases are agreed by way of consultation with workers through a joint forum of management and the employee representative committee.


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Engagement during the Covid-19 pandemic
It is a testament to the strength and maturity of the relationship we have built and maintained with our individual trade unions over the years that the employee relations environment remained stable in spite of the immense challenges resulting from the Covid-19 pandemic and associated national lockdown. Moreover, Harmony reaped the benefits of its honest and open trade union relationships during this period.
We established a central Covid-response team to manage our engagement with the unions during the national lockdown. Throughout the national lockdown, this team engaged with the unions and ensured they were actively involved in all the decision making that would significantly impact our employees. This included all aspects relating to the safe transportation, accommodation during isolation and quarantine, wage remuneration, and safe operating procedures on the mines.
Employee benefits in South Africa
We have a range of benefits available to our workforce in South Africa. For details on these benefits, see the Remuneration report.

Employee Share Ownership Scheme
In February 2019, Harmony launched the Sisonke employee share ownership scheme (ESOP) - “Sisonke” being the isiXhosa word for “we are together”. The scheme applies to approximately 30 700 non-managerial employees. Under the scheme, 6.7 million ordinary shares were issued to the Sisonke ESOP Trust with 225 participation units given to each eligible employee. The units will vest after three years (in 2022) and will convert into shares, which will then be sold and paid out to each beneficiary together with any dividends accumulated since allocation.
Promoting home ownership
Our housing and living strategy aims to promote home ownership. In order to assist some of our employees in buying their own homes, Harmony is selling company-owned properties to employees at prices below market value. During FY20, 109 company properties were purchased by employees: 32 of these have been registered and 77 are awaiting registration at the deeds office. To further facilitate home ownership, the company participates in and supports the pension-backed home loan scheme negotiated for the industry by the Minerals Council. The number of employees participating in the scheme in FY20 was 262 (FY19: 1 110).
Accommodation and living conditions
We recognise that the provision of adequate housing and the facilitation of improved living conditions is a basic constitutional right and one of the pillars upon which human dignity rests. Mining Charter III reiterates the requirement for mining right holders to improve housing and living conditions for mineworkers and ensure that accommodation is in line with the Housing and Living Conditions Standard for the Mining and Minerals Industry.
We have achieved the target of accommodating all our employees residing in hostels in single rooms. There were 7 719 employees and 19 contractors residing in Harmony hostels in FY20, and 3 828 employees were residing in company-owned houses with their families. A total of R702 million was paid to employees residing off company premises in the form of a living out allowance.

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Impact of Covid-19 pandemic on wages and salaries 
The Covid-19 pandemic has had an unprecedented impact on our society and economy, both in South Africa and in Papua New Guinea. Along with every other business, Harmony faced the very difficult task of sustaining itself in a severely disrupted business environment, including the compulsory suspension of business operations, either partial or absolute, across all operations. In the face of these challenges, Harmony was resolute in maintaining transparency with our employees, particularly in terms of wage remuneration.
In South Africa, different pay arrangements were negotiated and agreed to by organised labour for the period between April and end June 2020. These arrangements included:
• Paying employees at home on special leave their full salaries for April on the basis that those who had not
  been able to work as a result of the lockdown would work back 12 days and use six days of their annual leave
• Paying between 30% and 50% of basic pay to employees who were not required to work owing to the
  lockdown restrictions in place during May and June
• That the 2020 Christmas break discussions be re-opened with a view to substantially shortening this break to
  the duration of the Christmas long weekend
The payment of the living out allowance, pension/provident fund top up to 100% and the payment of employees’ medical aid premiums remained in place for the May and June salary months.
In addition to this, Harmony also made an application on behalf of all employees to the Unemployment Insurance Fund (UIF) for the Temporary Employees/Employers Relief Scheme (TERS) for the months of May through to August. To date the payment for May has been received. The applications submitted on behalf of our foreign national employees had not, at the time of writing, been processed and Harmony is in daily contact with the fund, either directly or via the Minerals Council.

Human rights
Respect for human rights is entrenched in and underpins our values. While we uphold the United Nations’ Global Compact’s principles on human rights and labour, human rights are specifically catered for in our human resource policies, charters and contracts of engagement. The human resources function and community engagement managers closely monitor our human rights performance at operational level.


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OUTLOOK FY21
Our employee relations will continue to focus on managing the impact and fall-out of the Covid-19 epidemic and improving our gender diversity profile.
In South Africa:
• The next round of gold mining sector wage negotiations for the three-year period beginning July 2021 is due to
  begin in October 2020
• Focus on meeting Mining Charter III targets on HDP and female representation
In Papua New Guinea:
We will continue to work towards improving gender diversity and working conditions for female employees. Our self-determined targets for FY21 are:
• Female representation of at least 17%
• At least 70% of employees to be based in Morobe Province
• More than 45% of lower management and superintendent level employees to be citizens of Papua New
  Guinea
• More than 44% of tier 1 and 2 employees to come from local communities



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DELIVERING PROFITABLE OUNCES

OPERATIONAL PERFORMANCE
Operational excellence is one of the four strategic pillars upon which Harmony has built its business and which is vital to delivering on our strategy - to create value by operating safely and sustainably, and by growing our margins. In striving to maintain operational excellence we prioritise safety, ensure strict cost control and management of grades mined and encourage disciplined mining to improve productivity and efficiencies.
ex15iar20_20201023144344.gif
Our approach
Our approach to improved operational performance is driven by our commitment to operational excellence and to ensuring safe, consistent, predictable and profitable production. We aim to create an enabling and safe environment for delivery on our operational plans, reduced unit costs and improved productivity so as to maximise the generation of free cash flow. Operational excellence is central to generating cash flow.

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Key focus areas of our operational excellence programme include:
Safety and health
Infrastructure maintenance
-Journey to proactive safety
-Agile response to Covid-19 pandemic
-Risk management and focus on critical controls
Fewer unplanned stoppages
Grade management and mining flexibility
Cost management
-Limit mining below cut-off grade
-Incorporating flexibility into our mining plans
-Focused cost management and project delivery
-Improved productivity
Capital allocation
Environmental and social management
Prioritised and focused capital allocation for growth and to sustain the business
-Sustainable and responsible environmental stewardship
-Community engagement and social upliftment

Safety and operational risk management
Managing safety risks: Safety is a key material risk for Harmony. Thus, ensuring safe production, preventing loss of life incidents and embedding a proactive safety culture across all of our operations is imperative. We have adopted global best practice safety standards, a four-layered risk management based approach, implemented modernised safety systems, and intensified our focus on leadership development and training to address behaviour to achieve our goal of ensuring that each employee safely returns home every day. See Safety and health for further details on our safety performance and management.
Managing operational risks: Operational risk management is an integral feature of our business and operating strategy. It entails managing risks effectively while working in a productive way. Our risk-based approach helps ensure that all supporting systems are functioning efficiently. Safety hazards and operational business risks are identified and dealt with continuously at each of our operations.
Harmony’s top three operational risks are:
The spread of the Covid-19 infection and its potential impact on our employees and business sustainability
Failure to eliminate loss of life incidents and improve safety performance
Depleting ore reserve base

Our performance FY20
Harmony’s operational performance in FY20 cannot be discussed without reference to the Covid-19 global pandemic. While the pandemic and the associated national lockdowns in South Africa only fully affected our operations during the fourth quarter, such was the profound and unprecedented impact of this event that it affected every sphere of our business and limited our normal operating capacity.
For a period of five weeks from 26 March to 30 April, we were compelled to almost entirely suspend our operations to comply with the stipulations of the Level 5 lockdown in South Africa, with only care and maintenance, essential services, surface operations and open-pit mining activities being permitted. On 1 May, South Africa moved from Level 5 to level 4, which effectively allowed underground mines to operate at 50% of our labour capacity, and from 1 June we were permitted to ramp-up to 100% production.
However, the ramp-ups that were permitted from early May were, in themselves, severely hampered by several factors, not least of which was the disruptions to our supply chains, a change in operating procedures to accommodate necessary Covid-preventative measures, the compulsory quarantining of our employees before they were allowed back on site, the isolation of those employees who did contract Covid-19, and delays in the return of our foreign employees - numbering some 5 000 highly-skilled miners - to travel cross-border to re-enter South Africa and return to work. Given these challenges, we were only able to return to 100% production by the end of August 2020.
Our operations in South Africa were also impacted by scheduled power interruptions in December 2019, when Eskom declared an unprecedented level 6 load-shedding on 9 December 2019. Electricity consumption was reduced to levels required only for the maintenance of emergency services. The resulting loss of production was estimated at 2 572oz to 2 893oz (80kg to 90kg). The Covid-related lockdown was compounded by further intermittent load shedding. The unreliability of electricity supply, together with its cost - now close to 16% of total costs - is a continuing concern and we are taking steps to mitigate the situation - see Environmental management and stewardship. Total production lost in South Africa owing to load-shedding and the national Covid lockdown is estimated at 160 432oz (4 990kg).
While our Hidden Valley operation in Papua New Guinea was not as severely impacted by the Covid-19 pandemic and associated lockdowns as was the case in South Africa, production was also affected by adjusted operating procedures (especially as it related to personnel who were subject to fly-in-fly-out arrangements and who could not be on site or who were not able to leave the site due to Covid-19 restrictions).
The combination of these factors inevitably resulted in a far lower rate of production for the fourth quarter. Consequently, group production for FY20 decreased by 15% to 1.22Moz of gold and gold equivalents (FY19: 1.44Moz). Aside from the effects of the Covid-19 pandemic, production was also affected by a marginal decrease in

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the underground grade mined from 5.59g/t in FY19 to 5.45g/t in FY20. That regression was primarily due to geological challenges and seismicity at Kusasalethu. Conversely, surface operations posted a 3.9% improvement in grade to 0.267g/t (FY19: 0.257g/t).
The impact of lower production resulted in an 18% increase in all-in sustaining costs to R651 356/kg (US$1 293/oz) (FY19: R550 005/kg; US$1 207/oz).
However, lower production was countered by the significant rise in the gold price as investors sought a safe haven in gold in the wake of the pandemic and a rise in geopolitical tensions. The average gold price received for our product in FY20 rose by 25% to R735 569/kg (US$1 461/oz) compared to R586 653/kg (US$1 287/oz) the previous year. This resulted in a production profit of R7 197 million (US$459 million), representing an annual increase of 9% (FY19: R6 588 million; US$465 million).
Total capital expenditure was similarly impacted by the national lockdown and the phased start-up of operations which resulted in a decline in expenditure of 24% to R3 553 million (FY19: 4 687 million). Capital spend on development and growth projects in particular was cut back during the fourth quarter of FY20. To redress this, more capital has been allocated towards development in FY21 to ensure that sufficient panels are available to mine.
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Operating free cash flow
Despite the challenges, Harmony remained focused on generating operating free cash flow in FY20. Operating free cash flow increased by more than 100% to R3.6 billion (FY19: R1.7 billion), mainly due to the 25% surge in the average gold price received. Similarly, the operating free cash flow margin increased to 13% (FY19: 7%).
ex15iar20_20201023144557.gif
FY21 Outlook
Given the extreme uncertainty that surrounds the Covid-19 pandemic, its expected duration and the associated socio-economic impacts, it is with some degree of caution that we look towards FY21, particularly from an operational perspective. Having said that, in the next financial year (FY21), we plan to produce approximately 1.26Moz to 1.30Moz of gold at an all-in sustaining unit cost of between R690 000/kg to R710 000/kg.
The acquisition of Mponeng and Mine Waste Solutions, which was finalised at the end of September 2020, will contribute positively to production and revenue in FY21. Mponeng is situated close to our Kusasalethu mine in the

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West Witwatersrand (West Wits) region. While each of these operations has its own treatment plant, there are possible synergies regarding surface retreatment that can be explored. The mine dumps at Deelkraal, Savuka and Kusasalethu are all in the same region and will provide extra ounces for the group with the increased processing capacity. In addition, Harmony acquired an additional processing plant - the Kopanang plant - which can be used specifically to treat surface sources.
The acquisition of these various assets will help offset the closure of Unisel and the expected decline in production at Masimong and Bambanani as these operations near the end of their operating lives.
Looking ahead, we have a number of growth opportunities. We have applied for the life-of-mine extension at Hidden Valley, begun mining the Great Noligwa shaft pillar and almost completed the Zaaiplaats project feasibility study.
Exploration drilling at Kalgold has yielded favourable results and that operation has the potential to be further expanded. We are also drilling in the vicinity of Target North, situated on the Witwatersrand Basin.
Key focus areas and actions FY21:
Continue our journey of embedding a proactive safety culture
Ensure that we meet our operational plans and generate free cash flow
Integrate Mponeng and Mine Waste Solutions and create synergies in the West Wits region that will unlock value
Pursue organic brownfields growth strategy
Continue to drive down unit costs by improving our safety performance, delivering on our production plans, and increasing the productivity of our mining teams
See overleaf for graphs illustrating forecast group growth capital expenditure to FY23 and capital expenditure by operation for FY21.

FY21 production and capital guidance*
Operation
Production
Capital expenditure 1,2
Life of mine
(oz)
(Rm)
(US$m)
(years)
Tshepong operations
248 600 - 256 400
1 174
76
20
Moab Khotsong
220 500 - 227 500
746
48
8
Bambanani
67 900 - 70 100
72
5
3
Doornkop
112 700 - 116 300
476
31
16
Joel
51 700 - 53 300
178
11
10
Target 1
80 700 - 83 300
443
28
7
Kusasalethu
123 000 - 127 000
262
17
4
Masimong
62 500 - 64 500
41
3
1.5
Underground operations - total 3
967 600 - 998 400
3 392
219
 
South African surface operations (tailings and waste rock dumps)
80 700 - 83 300
181
11
14+
Kalgold
39 400 - 40 600
54
4
13
Hidden Valley 4
172 300 - 177 700
1 376
88
4
Total
~1.260 - 1.300Moz
5 003
322
 
1 
Excludes Wafi-Golpu
2 
At an exchange rate of R15.55/US$
3 
At an underground recovered grade of ~5.47g/t to 5.53g/t
4 
Includes deferred stripping
*
Guidance on Mponeng and Mine Waste Solutions will be shared in February 2021, once the assets have been integrated into our portfolio


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Forecast capital expenditure to FY23 and capital expenditure by operation for FY21
In rands:

ex15iar20_20201023144748.gif
ex15iar20_20201023144803.gif
Performance by operation
South Africa - underground operations
When reviewing the individual performance of our operations, one should bear in mind the profound impact the Covid-19 pandemic had on our business. While the pandemic and the associated national lockdowns only fully affected our operations during the fourth quarter, such was the significant and unprecedented impact of this event that it affected every sphere of our business. Capital expenditure was also reduced during the last quarter. It is for this reason that the prioritisation of development will be critical in FY21 to ensure available stoping areas.
South Africa - surface operations
Harmony has one of the largest surface source operations in the world, with close to 300 000 ounces of low-risk, low-cost gold ore to mine.
With a planned combined life of mine of more than 14 years, our surface operations - including Kalgold, Phoenix, Central Plant Reclamation and the waste rock dumps - carried Harmony through the unprecedented Covid-19 pandemic at the onset of the South African lockdown in the fourth quarter of FY20.


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Forecast capital expenditure to FY23 and capital expenditure by operation for FY21 continued
In US dollars:
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ex15iar20_20201023144834.gif
Papua New Guinea - open-cast operations
While there was no national lockdown in Papua New Guinea, our operation here was less severely affected by the outbreak of the Covid-19 pandemic than our South African operations. Operating procedures were adjusted and work rosters extended to accommodate domestic and international quarantining requirements. This in turn impacted labour efficiency and ultimately production.

SOUTH AFRICA - UNDERGROUND OPERATION

Tshepong operations
 
 
 FY20
 FY19
FY18*
Number of employees
 
 
 
 
- Permanent
 
8 224
8 091
8 347
- Contractors
 
792
724
673
Total
 
9 016
8 815
9 020
Operational
 
 
 
 
Volumes milled
(000t) (metric)
1 417
1 612
1 716
 
(000t) (imperial)
1 562
1 777
1 893
Gold produced
(kg)
7 293
7 967
9 394
 
(oz)
234 475
256 146
302 026

77



Gold sold
(kg)
7 399
7 922
9 338
 
(oz)
237 882
254 698
300 223
Grade
(g/t)
5.15
4.94
5.47
 
(oz/t)
0.150
0.144
0.160
Productivity
(g/TEC)
73.24
84.62
93.93
Development results
 
 
 
 
- Total metres
 
17 551
23 259
23 089
- Reef metres
 
3 131
3 323
3 159
- Capital metres
 
140
809
588
Financial
 
 
 
 
Revenue
(Rm)
5 452
4 685
5 389
 
(US$m)
348
330
419
Average gold price received
(R/kg)
736 863
591 331
577 058
 
(US$/oz)
1 463
1 297
1 397
Cash operating cost
(Rm)
4 252
4 008
3 829
 
(US$m)
271
283
298
Production profit
(Rm)
1 154
712
1 590
 
(US$m)
74
50
123
Capital expenditure
(Rm)
930
1 130
1 008
 
(US$m)
59
80
78
Operating free cash flow 1
(Rm)
270
(453)
552
 
(US$m)
17
(32)
43
Cash operating cost
(R/kg)
583 018
503 033
407 575
 
(US$/oz)
1 158
1 103
987
All-in sustaining cost
(R/kg)
713 202
636 281
514 537
 
(US$/oz)
1 416
1 396
1 245
Average exchange rate
(R/US$)
15.66
14.18
12.85
Safety
 
 
 
 
Number of fatalities
 
2
4
2
Lost-time injury frequency rate
per million hours worked
5.05
7.75
7.80
Environment
 
 
 
 
Electricity consumption
(GWh)
549
466
454
Water consumption - primary activities
(ML)
2 813
2 778
2 701
Greenhouse gas emissions
(000t CO2e)
581
535
441
Intensity data per tonne treated
 
 
 
 
- energy
 
0.39
0.29
0.26
- water
 
1.98
1.72
1.57
- greenhouse gas emissions
 
0.41
0.33
0.26
Number of reportable environmental incidents
 
0
0
0
Community
 
 
 
 
Local economic development 2
(Rm)
32
18
9
Training and development
(Rm)
94
86
92
*
From FY18, the Tshepong and Phakisa mines were integrated and reported on as a single entity, Tshepong operations
1 
Operating free cash flow = revenue - cash operating cost - capital expenditure ± impact of run of mine (ROM) costs as per operating results
2 
Figures include R25 million spent on the local economic development projects

Other salient features
 
Status of operation
Steady state operation: development continues
Life of mine
20 years
Nameplate hoisting capacity (per month)
283 000 tonnes (312 000 tons)
Compliance and certification
● New order mining right - December 2007
● ISO 14001
● ISO 9001

78




Mineral Reserve estimates at 30 June 2020
 
Proved
Probable
Total
Reserves (metric)
Tonnes
(Mt)
Grade
(g/t)
Gold
(000kg)
Tonnes
(Mt)
Grade
(g/t)
Gold
(000kg)
Tonnes
(Mt)
Grade
(g/t)
Gold
(000kg)
 
22.2
5.87
130
4.5
5.48
25
26.7
5.80
155
Reserves (imperial)
Tons
(Mt)
Grade
(oz/t)
Gold
(000oz)
Tons
(Mt)
Grade
(oz/t)
Gold
(000oz)
Tons
(Mt)
Grade
(oz/t)
Gold
(000oz)
 
24.4
0.171
4 180
5.0
0.160
800
29.4
0.169
4 980

Overview of operations
The Tshepong operations is a deep-level underground mining operation located in the Free State, near the town of Welkom, approximately 250km from Johannesburg. It is an integrated mining complex that includes the Tshepong and Phakisa underground mines/sections. The amalgamation and reporting of the Tshepong operations as a single entity began in FY18. The close proximity of these two mines has allowed for the integration of operations, which has facilitated the use of excess hoisting capacity and underused infrastructure at Tshepong and the de-bottlenecking of Phakisa’s restrained infrastructure. Given that Tshepong is our largest mining complex, our plan is to mine this orebody for the next 20 years.
The Tshepong section is a mature underground operation that uses conventional undercut mining, while the Phakisa section, which is a newer mine, uses the conventional undercut and opencut mining method. Rock from Phakisa is transported via a rail-veyor system to the Nyala shaft, from where it is hoisted to surface. The principal gold-bearing orebody exploited by both sections is the Basal Reef with the B Reef being mined as a high-grade secondary reef. Mining is conducted at depths ranging between 1 500m and 2 300m. The ore mined is processed at the Harmony One plant with gold being recovered using the gold cyanide leaching process.

Operating performance FY20
Regrettably, two fatalities occurred at the Tshepong operations in FY20. As the first of these was a result of a fall-of-ground incident which occurred early in the first quarter, we focused efforts on fall of ground golden controls and installing additional permanent steel netting and finding a solution to secure these nets close to the face using blast on support in an attempt to eliminate further fall of ground injuries.
In FY20, Tshepong was the group’s largest operation (contributing 19% of group gold production). Challenges arising from load shedding and operating restrictions resulting from the Covid-related lockdown levels, inevitably resulted in a decline in production year on year. These challenges resulted in a 12% drop year on year in the volume of ore milled to 1.417Mt. However, the decline in volume was countered by a 4% increase in the recovered grade to 5.15g/t. Total gold production for FY20 was 8% lower at 7 293kg (234 475oz).
Operating free cash flow of R270 million (US$17 million) was recorded in FY20, which was a significant improvement on the R453 million (US$32 million) loss recorded in FY19. The financial performance was aided by the substantial increase in the gold price during the first half of 2020. The average rand gold price received increased by 25% to R736 863kg. Revenue increased 16% year on year to R5 452 million (5% increase to US$348 million). Cash operating costs increased by 6% to R4 252 million (decreased by 4% to US$271 million) mainly due to annual wage and Eskom electricity tariff increases.
Capital expenditure decreased by 18% to R930 million (decreased by 26% to US$59 million), largely due to the fact that all such expenditure was suspended during the national lockdown in April 2020 and the subsequent phased start-up of operations.

Outlook for FY21
The key focus for FY21 will be to improve the mine’s operational flexibility, especially on development. We hope to achieve higher outputs per crew and ultimately drive up the volume and mine at the reserve grade.

Moab Khotsong
 
 
FY20
 FY19
FY18*
Number of employees
 
 
 
 
- Permanent
 
5 343
5 421
5 804
- Contractors
 
1 086
1 036
1 014

79



Total
 
6 551
6 457
6 818
Operational
 
 
 
 
Volumes milled
(000t) (metric)
746
970
327
 
(000t) (imperial)
822
1 069
360
Gold produced
(kg)
6 592
7 928
3 296
 
(oz)
211 938
254 891
105 969
Gold sold
(kg)
6 799
7 794
3 165
 
(oz)
218 592
250 583
101 757
Grade
(g/t)
8.84
8.17
10.08
 
(oz/t)
0.258
0.238
0.294
Productivity
(g/TEC)
102.76
120.67
135.17
Development results
 
 
 
 
- Total metres
 
8 815
10 472
9 527
- Reef metres
 
1 173
1 202
1 328
- Capital metres
 
1 363
1 432
380
Financial
 
 
 
 
Revenue
(Rm)
5 008
4 470
1 672
 
(US$m)
320
315
130
Average gold price received
(R/kg)
736 533
573 522
528 387
 
(US$/oz)
1 463
1 258
1 279
Cash operating cost
(Rm)
3 283
3 167
1 037
 
(US$m)
210
223
81
Production profit
(Rm)
1 664
1 369
720
 
(US$m)
106
96
56
Capital expenditure
(Rm)
498
559
173
 
(US$m)
32
39
13
Operating free cash flow 1
(Rm)
1 228
745
462
 
(US$m)
78
53
36
Cash operating cost
(R/kg)
497 953
399 414
314 526
 
(US$/oz)
989
876
761
All-in sustaining cost
(R/kg)
566 942
477 581
420 286
 
(US$/oz)
1 126
1 048
1 017
Average exchange rate
(R/US$)
15.66
14.18
12.85
Safety
 
 
 
 
Number of fatalities
 
1
1
1
Lost-time injury frequency rate
per million hours worked
7.95
9.75
11.18
Environment 2
 
 
 
 
Electricity consumption
(GWh)
738
766
114
Water consumption - primary activities
(ML)
5 975
6 898
1 702
Greenhouse gas emissions
(000t CO2e)
784
700
110
Intensity data per tonne treated
 
 
 
 
- energy
 
0.99
0.79
0.35
- water
 
8.01
7.11
5.20
- greenhouse gas emissions
 
0.81
0.72
0.35
Number of reportable environmental incidents
 
0
0
0
Community
 
 
 
 
Local economic development 3
(Rm)
22
19
7
Training and development
(Rm)
56
48
13
*
Incorporated into Harmony’s portfolio from 1 March 2018. The figures reported for FY18 are for the four months from March 2018 to June 2018
1 
Operating free cash flow = revenue - cash operating cost - capital expenditure ± impact of run of mine (ROM) costs as per operating results
2 
Note: figures include Nufcor
3. 
Figures include R5 million spent on the local economic development projects


80



Other salient features
 
Status of operation
Steady state operation: development continues
Life of mine
8 years
Nameplate hoisting capacity (per month)
160 000 tonnes (176 000 tons)
Compliance and certification
● New order mining right
● ISO 14001

Mineral Reserve estimates at 30 June 2020
 
Proved
Probable
Total
Reserves (metric)
Tonnes
(Mt)
Grade
(g/t)
Gold
(000kg)
Tonnes
(Mt)
Grade
(g/t)
Gold
(000kg)
Tonnes
(Mt)
Grade
(g/t)
Gold
(000kg)
 
3.2
7.93
25
3.3
8.57
28
6.5
8.26
53
Reserves (imperial)
Tons
(Mt)
Grade
(oz/t)
Gold
(000oz)
Tons
(Mt)
Grade
(oz/t)
Gold
(000oz)
Tons
(Mt)
Grade
(oz/t)
Gold
(000oz)
 
3.5
0.317
808
3.6
0.343
909
7.2
0.330
1 718

Overview of operations
Moab Khotsong is a deep-level mine situated near the towns of Orkney and Klerksdorp, approximately 180km south-west of Johannesburg. The mine, which began producing in 2003, was acquired from AngloGold Ashanti Limited in March 2018.
Mining is based on a scattered mining method together with an integrated backfill support system that incorporates bracket pillars. The geology at Moab Khotsong is structurally complex with large fault-loss areas between the three mining areas (top mine (Great Noligwa), middle mine and lower mine (growth project and Zaaiplaats project in prefeasibility study phase). The mine exploits the Vaal Reef as its primary orebody. The economic reef horizons are mined between 1 791m and 3 052m below surface. Ore mined is processed at the Great Noligwa gold plant. The plant uses the reverse gold leach method, with gold and uranium being recovered through gold cyanide and acid uranium leaching.

Operating performance FY20
We deeply regret to report that one employee lost his life in a mining-related incident in FY20. World best practice standards have been implemented, a risk management approach is being embedded, and learnings from the incident are being applied to improve the safety performance at Moab Khotsong.
The volume of ore milled and gold output was negatively impacted by damage caused by seismic activity in the operation’s highest-grade section during the third quarter. Only once the affected areas had been rehabilitated and declared safe were mining crews allowed to re-access them. Production was further affected by the Covid-19 pandemic in the fourth quarter. A 24% year on year reduction in ore milled to 746 000t resulted in the 17% decrease in gold production to 6 592kg (211 938oz). This was, however, offset by the 8% increase in recovered grade, which increased to 8.84g/t.
The mine is the group’s second largest gold operation (contributing 17% of total group production) and the largest contributor to operating free cash flow. The operation recorded revenue of R5 008 million (US$320 million) and incurred cash operating costs of R3 283 million (US$210 million) and capital expenditure of R498 million (US$32 million), resulting in the operation generating operating free cash flow of R1 228 million (US$78 million) in FY20.
A notable outcome of FY20 was the board’s approval of the Great Noligwa pillar extraction feasibility study. Safety was a key aspect of the feasibility study process. Harmony has extensive pillar mining expertise which will be used in developing the infrastructure for extraction and mining of the pillar. The project has extended Moab Khotsong’s life of mine by approximately two years.

Outlook for FY21
With eight years of life of mine left, the priority focus in FY21 will be to improve our safety performance; increase mining face lengths and achieve the reserve grade.


Bambanani

81



 
 
FY20
 FY19
FY18