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Anglo American created, two decades ago, the largest gold mine in the world by merging its South African badets.
AngloGold Ashanti, who has long been overshadowed by his rivals, may have to leave his home country to keep pace.
Newmont Mining and Barrick Gold have signed mega deals that will strengthen their lead over AngloGold. Afflicted Mponeng, the world's deepest mine in a dying South African industry struggling to control its costs, the third largest producer could increase its value by leaving the country, according to Rene Hochreiter, an badyst at Noah Capital Markets in Johannesburg .
"Their best choice is to get out of South Africa and leave Mponeng behind," he said. "The costs never go down in South African gold."
This would be the last step in AngloGold's gradual withdrawal from South Africa. The country supplied only 14 percent of its production in the third quarter of last year, up from 26 percent a year earlier, after the company sold and closed mines to stem losses.
AngloGold is now planning to divest its operations in South Africa and sign up for London or Toronto, sources said last month. Its listing in London would give the company exposure to a large number of investors with very few options to buy gold stocks, following Barrick's acquisition of Randgold Resources.
An AngloGold spokesman declined to comment.
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To exit South Africa, the company is expected to offer a sharp reduction in its badets, said Leon Esterhuizen, an badyst at Nedcor Securities Ltd. This would not be enough to interest international companies.
"They will not invest here," Esterhuizen said. "Whatever AngloGold or anybody else is in South Africa, it makes sense to go out and look for other places to earn money from," he said. ;money."
This leaves other South African producers as potential buyers. The largest, Sibanye Gold, is concerned about the acquisition of Lonmin, a platinum mine, while Gold Fields is focusing on its only South African mine, unprofitable for a decade.
AngloGold CEO Kelvin Dushnisky wants to sell non-core badets to unlock value, but it's too early to make a decision on South Africa. If the company's reduced operations can generate free cash flow, the perception of the country could change, he said.
Partly benefitting from the recovery of its predecessor, the new CEO has seen AngloGold's shares climb by 48% since taking office in September. Barrick climbed 18% and Newmont 1.8% over the same period.
Additional gains could be tempered by tough jurisdictions – including Tanzania and the Democratic Republic of Congo – in which the miner operates, said James Bell, an badyst at RBC Capital Markets. Indeed, given the challenges that AngloGold faces, the company should not be in a hurry to leave South Africa if it could make these operations profitable, he said.
The company may be interested in buying some of the badets created by Barrick and Newmont, but Bell does not think this will be part of a larger wave of consolidation in the industry.
"AngloGold is not a takeover target," he said. "It's a very big complicated company and it's exposed to jurisdictions where it's very difficult for other companies to be comfortable."
Last updated: 20 January 2019 18:18
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