AngloGold puts up 'for sale' sign
AngloGold Ashanti is eyeing the exit door for the second time in half a decade as it considers divestment options from its South African assets.
The gold producer's Mponeng mine in Carletonville, about 80km from Johannesburg, is the deepest in the world and its last mine in the country.
But as it stands, without substantial further investment the mine has a lifespan of less than a decade and has to compete with 13 operations in eight other countries.
"The investment to extend Mponeng's life beyond eight years has very strong competition for capital and other scarce resources from a host of other projects in our portfolio," CEO Kelvin Dushnisky said this week.
The way AngloGold sees it, its other mines are more attractive and generate higher returns and quicker payback periods, which is enough reason for it to have a look at the divestment options for its South African business.
Five years ago the gold miner, then and now the world's third-largest by volume, had a plan to put its South African and non-South African assets in different baskets, keeping the local mines listed on the JSE but spinning the rest out to a London listing.
It was a different version of the strategy employed by rival Gold Fields, which held on to only South Deep in SA and listed the rest of its local assets separately as Sibanye Gold.
At the time, SA's gold mining industry was still reeling from a wildcat strike the previous year and it was unclear how far the Association of Mineworkers & Construction Union would expand beyond its stronghold on the platinum belt.
AngloGold abandoned its demerger plans within a week when shareholders revolted against the idea of a dilutive rights issue of $2.1bn to reduce the company's debt as part of the split.
But the company has since quietly lessened its exposure to SA as part of a global and ongoing review of its portfolio. Two years ago AngloGold sold its Moab Khotsong and Kopanang mines along with some other surface assets.
It is not a done deal that the company will sell Mponeng, but it is one of the options being considered. And AngloGold will not flog the asset to just anyone.
"If the assets are sold, the buyer must have technical expertise and a robust track record of operating and dealing respectfully with stakeholders, along with the necessary financial capacity to sustain these assets going forward," Dushnisky told Business Times. Moab Khotsong, for example, is now part of Harmony.
"We believe that under the right ownership, our South African assets offer a compelling long-term value proposition that may allow for an extension to Mponeng mine's current life," Dushnisky said.