Harmony Gold Strikes $1.08 Billion MAC Copper Deal in Strategic Australian Expansion

South Africa’s Harmony Gold has advanced its international expansion plans with the proposed $1.08 billion (R19 billion) acquisition of Australia’s MAC Copper. The deal, which secured 98.43% shareholder approval and is advancing to court sanction on October 9, 2025, represents a transformative strategic pivot for Africa’s largest gold producer by volume toward the critical copper market amid unprecedented global demand for electrification infrastructure.

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Deal Structure and Timeline

Shareholder Approval Secured

The transaction moved significantly closer to completion after MAC Copper shareholders voted overwhelmingly in favor of the deal, structured as a Jersey law scheme of arrangement. A court sanction hearing is scheduled for October 9, with completion expected by the end of that month.

Strategic Premium

Harmony is offering $12.25 per MAC Copper share, representing a 20.7% premium to the company’s last closing price in New York. The all-cash structure demonstrates Harmony’s strong financial position, with net cash position up 285% to R11.1bn giving it a total available liquidity of nearly R21bn.

Regulatory Progress

The acquisition has cleared the final regulatory hurdle after Australia’s Foreign Investment Review Board (FIRB) gave its approval, following last week’s approval by the South African Reserve Bank. This comprehensive regulatory clearance underscores the strategic importance both governments place on the transaction.

The CSA Copper Mine: A Crown Jewel Asset

World-Class Operations

The all-cash deal would give Harmony full ownership of MAC’s only asset, the CSA copper mine in central western New South Wales. CSA is among Australia’s highest-grade and oldest operating copper mines, with a history stretching back nearly 150 years. The CSA Copper Mine produces 41,000 tonnes of copper annually with cash costs 30% below the global average.

Operational Excellence

At 1.9 km, it is also one of the country’s deepest underground operations, showcasing the technical expertise required for such complex mining operations. This depth and technical complexity align perfectly with Harmony’s proven expertise in ultra-deep mining operations in South Africa.

Strategic Value Creation

The mine’s exceptional economics are evident in its operational metrics. The CSA Mine’s low cash costs ($1.92/lb) provide a competitive edge in a tightening copper market, positioning Harmony as a low-cost producer in an increasingly supply-constrained industry.

Leadership Vision and Strategy

Beyers Nel’s Strategic Leadership

Beyers Nel was appointed group chief executive officer and executive director with effect from 1 January 2025, bringing 24 years’ experience in various operational, management and executive roles in gold mining. Nel’s appointment comes at a critical juncture as Harmony transitions from a pure-play gold producer to a diversified precious and base metals company.

Strategic Vision

Harmony chief executive Beyers Nel described the acquisition as a step that will fast-track the company’s strategy of building a portfolio of long-life, high-margin assets. Nel emphasized that “This acquisition accelerates Harmony’s strategy of adding to our portfolio of high-margin, long-life ore bodies. MAC Copper serves as a strategic lever, moving us towards a more resilient, geographically diverse asset portfolio, with copper enhancing cash flow resilience”.

Diversification Goals

“By 10 years, Harmony will ideally be 40% diversified into copper,” Nel noted, pointing towards greater geographical and commodity diversification. This ambitious target reflects the company’s commitment to reducing dependence on gold price volatility while capitalizing on structural copper demand growth.

The Global Copper Revolution

Electrification Driving Unprecedented Demand

Copper’s demand in clean energy is projected to reach 61% by 2040 as part of the global energy transition. The metal has become indispensable for the renewable energy revolution, with an electric vehicle requiring three to five times as much copper as an internal combustion engine vehicle.

Infrastructure Requirements

“A normal Honda Accord needs about 40 pounds of copper. The same battery electric Honda Accord needs almost 200 pounds of copper. Onshore wind turbines require about 10 tons of copper, and in offshore wind turbines, that amount can more than double”, according to University of Michigan research.

Supply Constraints Challenge

Copper cannot be mined quickly enough to keep up with current U.S. policy guidelines to transition the country’s electricity and vehicle infrastructure to renewable energy. This supply-demand imbalance creates a compelling investment thesis for low-cost producers like the combined Harmony-MAC entity.

Market Dynamics

The copper industry needs to invest $2.1 trillion over the next 25 years to meet demand, highlighting the massive capital requirements and investment opportunities in the sector. Bank of America projects copper will reach $10,750 per tonne ($4.87/lb) in 2025, driven by strong demand fundamentals.

South Africa’s Mining Transformation

Economic Impact

South Africa’s copper ores and concentrates generated US $226.2 million in 2024, up slightly from US $221.6 million in 2023, according to World Bank data. While modest compared to gold and platinum exports, copper represents a growing opportunity for economic diversification.

Strategic Positioning

With South Africa’s copper footprint modest compared to its gold and platinum sectors, Harmony Gold is looking abroad to diversify its portfolio and add about 40,000 tons of copper per year to its output. This international expansion strategy addresses the limitations of domestic copper resources while capitalizing on world-class assets elsewhere.

Continental Context

South Africa remains a relatively small player in Africa’s copper industry, trailing far behind the Democratic Republic of Congo and Zambia, which dominate continental production. The MAC Copper acquisition provides Harmony with immediate access to high-grade production outside the African continent.

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Australian Mining Expansion Strategy

Broader Copper Portfolio

The transaction expands the company’s existing copper footprint in Australia, where it entered in 2022 with the Eva copper project in Queensland. The Johannesburg-based miner expects to begin production at Eva by 2028.

Production Targets

With CSA and Eva combined, Harmony aims to produce 100,000 tonnes of copper annually within five years. This production target would position Harmony as a significant global copper producer and provide substantial diversification from its traditional gold operations.

Resource Expansion

The Eva Copper project shows a 31% increase in estimated contained copper to 1.9mt and a 12% rise in estimated contained gold to 492,000oz compared with the initial 2024 declaration of resources, demonstrating the quality and expansion potential of Harmony’s Australian assets.

Financial Strength and Funding Strategy

Robust Financial Position

Harmony’s commitment to shareholder returns is evident in its FY2025 performance, which included a record $2.4 billion in shareholder distributions and a 65% dividend increase. This financial strength provides the foundation for strategic acquisitions and capital-intensive expansion projects.

Capital Structure Optimization

Funding for the acquisition will be covered through a mix of cash and debt facilities, a structure Harmony said would preserve shareholder returns while maintaining balance sheet strength. This balanced approach demonstrates sophisticated capital allocation strategy.

Cash Flow Enhancement

The company reported a 54% increase in adjusted free cash flow to ZAR11.1 billion (US$614 million) and a 26% rise in headline earnings per share, providing ample resources for growth investments and the MAC Copper acquisition.

Industry Consolidation Trends

Mining Sector Dynamics

The mining sector is witnessing increased consolidation, with companies like South32 and Sandfire Resources evaluating assets like MAC Copper. Harmony’s successful acquisition demonstrates its competitive positioning in the global mining M&A landscape.

Strategic Differentiation

Other players, such as Glencore and IGO, have also shown interest in Australian mining assets, highlighting the region’s attractiveness for investment. The successful completion of this transaction positions Harmony advantageously for future Australian opportunities.

Geographic Diversification

The acquisition represents part of a broader trend among South African miners. Harmony is among the few remaining South African gold producers squeezing profits from ageing, costly and some of the world’s deepest gold mines, making international diversification essential for long-term sustainability.

Future Growth Prospects

Papua New Guinea Expansion

Outside Australia, Harmony also owns the Hidden Valley gold mine and jointly holds the Wafi-Golpu copper-gold project with Newmont in Papua New Guinea. This project represents additional growth potential in Harmony’s copper portfolio.

Technology and Innovation

Copper is quickly becoming the cornerstone of the renewable energy revolution. Its unique properties make it indispensable for electrical wiring, electric vehicles, and renewable energy grids, ensuring long-term demand sustainability for Harmony’s expanded copper operations.

Market Leadership Position

By 2030, the global copper market is forecast to reach $339.95 billion, driven by electrification and digitalization trends. Harmony’s strategic positioning in this growth market through the MAC Copper acquisition provides significant value creation opportunities.

Risk Factors and Market Challenges

Integration Complexities

While Harmony’s shares initially surged 62% following the May 2025 announcement, recent intraday declines of 2.22% after regulatory approvals suggest short-term volatility. This volatility reflects normal market reactions to large-scale M&A transactions and integration uncertainties.

Operational Transition

The transaction still depends on several customary conditions, including court sanctioning and the fulfilment of terms under a Streams Restructure Deed. These remaining conditions require careful management to ensure successful completion.

Market Dynamics

However, the stock has faced short-term volatility. Shares plummeted 14.04% in late August 2025 amid concerns over rising operational costs and R13 billion in capital expenditures for mine life extensions, highlighting the challenges of managing large-scale capital investment programs.

Global Implications and Future Outlook

Critical Minerals Strategy

The construction of more complex grids capable of managing electricity generated by decentralized renewable sources and stabilizing their intermittent supply requires millions of feet of copper wiring. Harmony’s expanded copper portfolio positions the company to benefit from this infrastructure transformation.

Energy Transition Leadership

Even without factoring in the energy transition, the world will need to mine at least 115% more copper than has been mined in human history pre-2018 to meet business-as-usual trends. This staggering demand projection underscores the strategic value of Harmony’s copper investments.

Sustainable Development

By adding copper, Harmony also gains exposure to a key commodity in the global energy transition, helping offset volatility in the gold price. This diversification strategy aligns with global sustainability objectives while enhancing financial resilience.

Conclusion

Harmony Gold’s $1.08 billion acquisition of MAC Copper represents more than a simple diversification play—it positions the South African mining giant at the forefront of the global energy transition. With copper demand projected to surge as the world electrifies its transportation and energy infrastructure, Harmony’s strategic pivot couldn’t be better timed.

Under CEO Beyers Nel’s leadership, the company is executing a carefully planned transformation from a South African gold-focused operation to a globally diversified precious and base metals producer. The MAC Copper acquisition, combined with the Eva Copper project, provides Harmony with a pathway to 100,000 tonnes of annual copper production within five years.

As regulatory approvals conclude and the transaction moves toward completion in October 2025, Harmony Gold stands poised to capitalize on one of the most significant commodity demand stories of the 21st century. The combination of operational expertise, financial strength, and strategic vision positions the company to deliver substantial value to shareholders while contributing to the global energy transition.

The deal’s success will ultimately depend on flawless execution of the integration process and Harmony’s ability to optimize operations across its expanded copper portfolio. However, with strong fundamentals, proven management, and exposure to the structural growth story of copper demand, Harmony Gold has positioned itself advantageously for the next phase of global economic development.

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By: Montel Kamau

Serrari Financial Analyst

2nd September, 2025