https://www.bdlive.co.za/business/mining/2014/02/05/gold-sector-strife-brings-mining-company-ceos-closer-together
Gold sector strife brings mining company CEOs closer together
AngloGold Ashanti CEO Srinivasan Venkatakrishnan. Picture: MARTIN RHODES
THE strife about wages in the gold mining sector in the past year, and a falling gold price, have pulled CEOs closer, AngloGold Ashanti CEO Srinivasan Venkatakrishnan said on Tuesday.
This had led to improved co-operation over safety, productivity and technology. Further, the thawing of relations among the leaders in the gold sector had resulted in the redrawing of artificial boundaries locking up chunks of gold deposits in South Africa.
Mr Venkatakrishnan gave an example of the land swap between Harmony Gold and Sibanye Gold. AngloGold was talking to various other gold companies about land, he said in an interview on the sidelines of the Mining Indaba in Cape Town.
The CEOs and their senior management teams had forged closer relationships during last year’s wage talks. "Thanks to the exercise we went through with the gold wage talks the CEOs and their second in commands have become incredibly close to each other," Mr Venkatakrishnan said.
"We chat and exchange ideas — i t’s more like peers working together. In the past investors would play one company off against the other, but that’s not the case now with this free flow of information," he said.
Further, the fall in the gold price had also pulled CEOs together as they sought ways of cutting costs, boosting productivity and potentially introducing new technology to extract gold more safely and cheaply — an area that AngloGold was pushing hard with on-mine trials.
AngloGold expected to wrap up the sale of its Navachab mine in Namibia this year, completing a process started last year, Mr Venkatakrishnan said. Last year, when he was appointed CEO of the company, he said there were a number of other assets that AngloGold would like to sell.
"In the market right now to sell assets which don’t have currency play doesn’t make sense," Mr Venkatakrishnan said on Tuesday. "Its not a seller’s market or even a buyer’s market, because they can’t get finance — we have to sit this storm out."
Obuasi, the perennially underperforming mine in Ghana, was receiving the closest attention from himself and other senior management. It would not be closed because the deposit there had a "cracking ore body" and AngloGold was looking for a long-term fix after the benefits from a number of other attempts fizzled out after a year or two.
The new plan entails sinking a decline to about 1.5km below surface, with some of that work on the ore body, generating cash for the $60m project. The decline would use trucks to haul ore out of the mine and speed up underground development, which was the key constraint at Obuasi.
The plant has capacity for 2.5-million to 3-million tonnes a year of ore, but it is receiving about half of that now.
Any increase in volumes will lower the costs at the mine.
AngloGold is commissioning a back-fill plant next year, which will use tailings added to cement to provide support underground to mined-out areas.
The intention is to get the all-in sustaining costs to below $1,000/oz. In the September quarter last year, Obuasi reported an all-in sustaining cost of $1,900/oz.
"Collectively, there’s a willingness now between unions, government and management to fix Obuasi for the long term," Mr Venkatakrishnan said.
"The union appreciates there will be some tough decisions coming and the government understands there will be some solutions that will be put in."
AngloGold slashed 400 jobs last year, and more are likely to be cut this year.