AngloGold Ashanti is the latest producer of the precious metal to unveil glittering 2020 results, driven mostly by the surge in prices last year as investors fled to gold’s safe-haven embrace amid the pandemic and global lockdowns. Headline earnings for the year leapt to a cool $1-billion from $379-million the year before. Its dividend rose five-fold to 705 SA cents per share. Net debt fell 62% to $597-million.
The company’s profile and profits are strikingly different from just a few years ago. In February 2016, the company’s head of corporate affairs in Ghana was killed during a riot at its Obuasi mine, which was besieged by an army of artisanal miners who swept in after the loss-making operation had been mothballed. AngloGold’s headline earnings for 2015 amounted to $49-million and much of its production base was found in South Africa. The company’s future at that time was decidedly not in Ghana. Indeed, its overall future and direction at the time were fraught with uncertainties.
The company today hardly resembles the one that existed five years ago, although its primary listing and corporate headquarters remain in Johannesburg — for now. AngloGold sold off its last operational assets in South Africa last year, including Mponeng — the world’s deepest mine with shafts reaching 4 kms beneath the surface of the planet — that is now in the hands of Harmony Gold.
“A change in primary listing could add value to the company at the right time. It’s not an immediate priority,” Interim CEO Christine Ramon told journalists during a media conference call on 22 February after the results were released. Ramon, AngloGold’s CFO, has been in the hot seat since the surprise departure in August of Canadian Kelvin Dushnisky. Ramon said the process to select a permanent CEO was “well advanced.” The company has had other recent shakeups at the top, notably the unexpected resignation in December of chairman Sipho Pityana who was succeeded by Maria Ramos.
The other tectonic change over the past half-decade has been the metamorphosis of Obuasi from a toxic asset that looked like a write-off to a key operation — almost literally a case of a mine being raised from the dead. AngloGold in 2017 announced that the illegal miners had been largely cleared from the operation. A change in political climate under then-new president Nana Akufo-Addo was at play, paving the way for AngloGold to revive Obuasi as a mechanised mine with an investment plan of around $500-million.
“The company aims to grow annual production from last year’s 3.05 million ounces to between 3.2 million ounces and 3.6 million ounces, by 2025. This growth will mainly include the ramp-up of the Obuasi mine in Ghana, and incremental improvements from existing assets in the next two years,” AngloGold said on Monday.
AngloGold has given a number of reasons for departing South Africa including a focus on high-margin assets. Yet it also speaks volumes about the investment environment in South Africa’s mining sector. Eskom’s woes, changing policy goalposts, BEE uncertainties, security concerns, transparency issues around the awarding of mineral rights and social and labour unrest have all combined to deter capital commitments. In Ghana, AngloGold has revived an asset that had been invaded at one point by thousands of illegal miners. In South Africa by way of jarring contrast, it has effectively given up. DM/BM