Growth in the mining industry will benefit all of South Africa, says DRDGOLD LTD CFO Riaan Davel.
Riaan Davel (profile) has been in mining for his whole career, and appreciates its straightforward, no-nonsense culture. The DRDGOLD LTD CFO says the industry has to find a model that will benefit all stakeholders and be internationally competitive.
You have been with DRDGOLD since January 2015. What has your time in the role been like?
“Challenging but enjoyable. It was a change in my career – before that I was in professional services. My focus has been on integrating our corporate office and the finance function with operations. I believe that getting involved in and understanding the business makes reporting better and makes you stay relevant and focused. As far as possible I try to be a strategic CFO. DRDGOLD is the longest continuously listed company on the JSE – it first listed in 1895. We are only involved in surface gold retreatment – rehabilitation through mining – and have no underground operations. In the last year or so, we’ve been busy finalising a transaction with Sibanye-Stillwater, which takes our Ergo model on the East Rand and implements it for tailings on the West Rand.”
Tell us about your current role and what it entails.
“I’m responsible for the finance function but we are a small corporate office set-up so I get involved in most things. We are listed on the New York Stock Exchange as well as on the JSE, so we are in a Sarbanes-Oxley environment with its strict regulatory reporting process. I get involved in that detail as well. I really enjoy the strategy side of things, though it is sometimes difficult to pull yourself away from the day to day. I currently spend about 60 percent of my time on the day to day though I would prefer that it was more on strategy.”
In your opinion, what is the most exciting thing currently happening at the company, or the most exciting part of the company’s strategy?
“We’ve done surface operations successfully for quite a bit and tweaked our process at Ergo on the East Rand, so I think the most exciting thing now is to replicate that on the far West Rand. This project has the rights to build a mega tailings dam on the West Rand to take up to 1.2 billion tonnes of tailings – that’s big enough to consolidate all the tailings on the West Rand. It’s a growth phase in our company – to take what we’ve learnt and implement that elsewhere.”
What are the greatest external factors affecting the company and its profitability and how do you mitigate these?
“Trying to compete in a volatile environment. Dollar-gold-price volatility and extreme rand-dollar volatility definitely affect us. We are ultimately unhedged but have taken out some short-term dollar positions recently, so we can manage the liquidity risk in the growth phase we are entering. So, we try to control what we can. We are a surface operation working with low grade, high volume, so we try to build stability and cost management into our operations to mitigate gold price exposure. Regarding water, we have invested in infrastructure to use water more efficiently and we have seen a significant decline in our use of potable water.”
What are some of the nuances of working in the mining industry and how do you contend with these?
“I’ve been fortunate in that my whole career I’ve been in the mining industry, although I was in professional services. So, I have experienced quite a lot in mining. I’ve always enjoyed the straight-forward, no-nonsense culture of the mining industry.”
What do you think South Africa’s mining industry most needs or most needs to do to ensure a sustainable future?
“For me that concerns certainty around policies. It’s very much about working together with government and regulators to encourage growth in the industry that will benefit all of South Africa. I believe a growing mining industry will benefit the entire country. I think we have to get to a model that will benefit all stakeholders, including holders of capital. We must get to the point where shareholders want to invest capital into South Africa, and we have to find a way to be internationally competitive.”
What do you think is the toughest challenge facing finance professionals today?
“Staying relevant for business. We have to be business partners and work closely with operations, with business to help achieve the organisation’s greater goals. Financial reporting must exist within that framework and be useful and relevant – both internally and externally.”
Considering the events of late last year with Steinhoff, and earlier this year with several other companies, what do you think finance executives most need to do to build and maintain the finance brand or profession?
“For me it’s that you have to be transparent and honest. More than ever before, you have to tell it like it is; you have to disclose the uncertainty and the sensitivities, and you have to be open and upfront about it. In a very complex world and industry, you have to keep the reporting as reliable, simple, compact, and straightforward as you can, to build and maintain the finance brand.”
What does the rest of this year hold for you both personally and professionally?
“Professionally, getting through our long reporting cycle, which goes up to October. We must also do XBRL reporting for the first time in the US. Then, successfully setting up the far West Rand project is also in my sights. Personally, I started running last year and have progressed to half marathon level twice, hopefully building to a marathon at some point in the future.”
What do you do in your downtime? How do you relax and unwind?
“I tend to have a bit less free time this time of year and what I do have, I try to spend with family. Over weekends I love watching sports. I also try do some running – I’m an early evening runner because I prefer to be at work fairly early in the morning.”