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NEAL Froneman, CEO of Sibanye-Stillwater, has doubled down on comments made in February that his company was considering merger and acquisition activity in order to grow the firm's gold production base.
"I think there are three high quality South African companies that should be put together," Froneman told BusinessLive, referring to his company, Gold Fields and AngloGold Ashanti. That he said would be "in the national interest" and would make a lot of commercial sense.
"Egos have to be put aside and we've got to do what's right in the national interest otherwise these South African companies will not feature in the future. They will be consumed by other companies," he said.
Nick Holland, the outgoing CEO of Gold Fields, declined to comment. "Our standard line on this stuff when people ask would you do this or that or would you look on this company is that we don't comment on this kind of speculation," he said.
"Companies are entitled to say what they want to say and equally we're entitled not to comment on speculation," Holland told BusinessLive.
"Gold is still important for Sibanye. It's currently too small a part of our business. It's only 19% of revenue and it's got to be a lot bigger," Froneman said.
"There is absolutely no doubt in my mind that consolidation is necessary. It is going to happen," Froneman said at the firm's year-end presentation last month.
"You're either going to be consolidated or you can drive consolidation. You have to become relevant. Even at $13bn, we're still not relevant. We need to be at least $20bn plus." Sibanye-Stillwater is valued at $14.3bn.
He added: "We've done very smart M&A. And of course what's only visible is what we've done. We've walked away from many opportunities as well which are not well known."
Mark Bristow, CEO of Barrick Gold, said in an interview with Miningmx that there was some logic to taking out AngloGold's 40% stake in Kibali gold mine. "From a technical perspective, the best assets to prioritise are those you hold in a joint venture," said Bristow.
But he added: "At the same time, running a process into South Africa … I'm not sure that is appropriate strategy".
Barrick had stepped back from M&A activity, and stopped short of revisiting its dividend strategy until there was more visibility on how the gold price might go, he said.