Image credit: AngloGold Ashanti
A call has been made for the establishment of a JSE-listed "gold champion" emanating from the consolidation of AngloGold Ashanti, Gold Fields and Sibanye.
BusinessDay quoted Sibanye-Stillwater chief executive Neal Froneman as saying that South Africa's interest would be "served" by the consolidation of the three gold miners.Gold Fields chief executive Nick Holland and AngloGold acting chief executive Christine Ramon declined to comment on Froneman's bold proposal.
BusinessDay wrote in an editorial that Froneman's idea 'brilliant'.
"It would give it the geographical diversity it so desperately needs away from SA to start playing with the big boys and let it compete for the world number one gold producer spot as it holds on to its top spot as the major, primary PGMs supplier," reads the editorial.
"But would the boards of AngloGold and Gold Fields recommend such a deal to shareholders after both companies spent decades building their large, offshore asset bases and effectively cutting all production ties with SA, apart from the South Deep mine Gold Fields has in the country?"
The newspaper went on to answer its question by opining that shareholders of both companies are unlikely to want Sibanye's three, deep-level gold mining complexes and its new underground Burnstone mine in the mix because they have, on average, costs nearly $350/oz higher than AngloGold, which produces metal for $1,059/oz.
"Both companies are pumping cash and embarking on growth projects. There is no doubt both are world-class companies," reads the editorial.
"So what would be the benefit of the world number three gold miner, AngloGold, or number six, Gold Fields, tying up with equally regarded Sibanye?
"Apart from size, would there be any advantage to being joined at the hip with a company that has all its gold assets in SA, a jurisdiction that is regarded with great wariness by international investors, and has more expensive mines?
"This would be an argument Froneman would have to make if his plans gains (sic) any traction.
"Based on his comments, Froneman wants a world-champion SA gold miner that can compete with the two giants in the US and Canada, Newmont Goldcorp and Barrick Gold, respectively."
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
