OWN CORRESPONDENT, Johannesburg | Wednesday
THE world’s largest gold producer has sold two mines in South Africa in a deal worth one billion rand, the SABC television station reported on Tuesday.
AngloGold announced that it had sold the gold mines – Elandsrand and Deelkraal, situated west of Johannesburg – to a smaller rival, Harmony Gold Mining Company.
Harmony, South Africa’s third biggest gold producer, said buying the mines formed part of its strategy to acquire marginal mines and make them profitable.
“Obviously these assets are of potentially higher grade than the existing assets we own. We do see our way of operating, which typically is a lower cost way of operating, as ideally suited for these assets at this mature stage of their life,” Harmony told SABC.
AngloGold sold the mines as they want to move away from low-grade, high-cost mining, SABC reported.
The acquisition will not affect jobs, with all 9 000 employees expected to be retained. Harmony will start running the mines from February next year.
Both companies said the government’s draft Minerals Development Bill published on Monday – which gives the state full and permanent sovereignty over mineral resources – would have no immediate effect on the future of the two mines.
The proposed legislation aims to transform South Africa’s white-dominated mining industry, which accounts for about 40% of its exports, by promoting black participation.
James Duncan, an AngloGold representative told Business Report: “We can’t operate (the mines) profitably going forward. Harmony gave us a good price.”
Duncan said the sale of the mines would reduce AngloGold’s extraction costs in South Africa by over 10%, with the average falling to $208 an ounce from $233 an ounce. This would pave the way for the 4,5% boost in earnings.
The mines produced over 500000 ounces, and would boost Harmony’s production from 2,2m ounces to 2,7m ounces a year. – AFP