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It may have lost its glitter, but it is not the end of the road for gold - Griffith - Asset News Hub

Friday, 8 October 2021

Having lost its long-held spot as a top gold producer on the continent and slipping off the global top 10 rankings, South Africa's gold production appears to be on the decline, but local miners remain optimistic about the future.

The optimism in the local gold mining sector was shared by some of the country's top mining executives on Thursday as they offered insight into the investment-deprived domestic market.

Issues pertaining to the country's perennial power challenges and legislative framework have made the sector less appealing to investors. However, those who have stayed the course appear to have taken the challenges in their stride.

"South Africa is a mature gold mining industry, we have been mining gold for over 140 years, but when we talk about the gold being a mature industry, that does not mean that mining in South African is mature, the fact is that gold is a mature industry," said Gold Fields' chief executive, Chris Griffith.

Griffith - a veteran mining executive who took over as CEO of the gold producer in April and is tasked with driving growth in the firm that currently has one asset in the country, the South Deep mine - added although the company was still invested in South Africa, it was not currently exploring for gold or new assets in the country.

"But we are doing that in other jurisdictions including Africa," he said during a discussion at the Joburg Indaba which explored the question of whether gold mining on the continent was a sunrise industry or facing its end.

The bulk of Gold Fields is outside the country, in Chile, Australia and west Africa.

Griffith added Africa still had "enormous opportunities in terms of what is under-explored" and it still had "massive potential to grow".

In 2019, South Africa was pipped by Ghana as Africa's top bullion producer, and in February, the US Geological Survey placed the country 11th in the scale of the top gold-producing countries in the world for 2020.

Gold Fields, which owns three mines in Ghana, would, according to Griffith, continue mining its last remaining asset in the country, which he said had 30 to 50 years worth of life.

His counterpart, Peter Steenkamp of Harmony Gold, the group that last year acquired the assets of AngloGold Ashanti, which included the world's deepest mine, Mponeng, said the company would stay in South Africa.

The $300 million AngloGold Ashanti transaction with Harmony marked its South African exit.

"The investments that we are making now are into assets that have got higher grades, lower costs and longer lives," added Steenkamp, saying the tailings business also offered profitable opportunities.

Harmony indicated it would consider deepening Mponeng, which this year delivered its first full-year financial contribution to the company. Harmony also has mines in Papua New Guinea.

"We have been through quite a few cycles, and we are in a good cycle at the moment. The quality of the ore body that we have in South Africa has made for good acquisitions. I am quite certain that the mines that we have will do well," said Steenkamp.

The current commodities upcycle has contributed handsomely to the fiscus, with the government collecting higher tax receipts.

However, the small green shoots seen by the industry in the recent past, such as the finalisation of the Mining Charter and the lifting of the self-generation threshold from 1 MW to 100 MW, has not done enough to attract new investment into the sector.

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