AngloGold upbeat on Africa even as mine uncertainty persists
(Bloomberg) — AngloGold Ashanti Ltd. remains upbeat on its African assets even as new mining rules threaten profits at two of the company’s key mines.
The world’s third-largest gold producer is mired in disputes with the governments of Tanzania and the Democratic Republic of Congo over law changes that raise taxes in the countries, where AngloGold gets the bulk of its African metal from. Still, those challenges will probably “eventually be corrected,” outgoing Chief Executive Officer Srinivasan Venkatakrishnan said.
“Storms do come and go – we have seen that happen in other jurisdictions, not just in Africa, even in Latin America,” Venkatakrishnan said in a phone interview. “You have to look beyond the short-term and take a practical view. If you were to take a knee-jerk decision, and make short-term calls, you will not be mining anywhere.”
Some countries want to enact new mining laws to get a bigger share of production proceeds. Tanzania, where AngloGold’s Geita mine is located, has approved laws that enable it to renegotiate contracts with miners and other measures such as higher royalty payments. Congo, where the company’s Kibali asset is, is implementing legislation to boost taxes, something that has faced stiff resistance from producers.
AngloGold plans to extend the life of its Geita mine and the Johannesburg-based producer is holding talks with the Tanzanian government over its investments in the country, Venkatakrishnan said.
Contributions from Geita and Kibali, Congo’s biggest gold mine, “have the potential to remain volatile,” due to the uncertainties over mining rules, Tyler Broda, an analyst at RBC Capital Markets, said in note. Randgold Resources Ltd. is the operator at Kibali.
AngloGold has had to sell some of its South African mines to stem losses in the country, where aging infrastructure, reserve depletion and accidents have raised costs and curbed output. The company may consider selling its Mponeng underground mine and surface operations if it can improve the assets’ performance and get a good price for them, the CEO said.
“Mponeng and our surface operations remain absolutely core to our portfolio, but like any other asset would be for sale at the right price,” Venkatakrishnan said.
(Written by Felix Njini)