Johannesburg - Gold Fields, South Africa's second biggest gold producer, was considering a venture with OAO GMK Norilsk Nickel to help it expand its overseas assets after a surge in the rand reduced profit, people familiar with the plan said. Gold Fields would transfer its profitable foreign mines in Australia and Ghana to the company.
The Russian company, currently the mining house's biggest shareholder, would contribute its ZAO Polyus gold mining arm.
Shares in the unit would trade in North America or London. The combination would create a gold producer with annual production of about 2.6 million ounces, making it the world's seventh biggest.
Gold Fields, whose $2.9 billion (R19.1 billion) purchase of Canada's Iamgold collapsed last year, is seeking assets outside South Africa after costs jumped because the rand almost doubled against the dollar since 2001. Norilsk said last month it wanted to focus on its main nickel and palladium business.
"Gold Fields is looking at the opportunities," said Patrice Rassou, a manager of Old Mutual Gold Fund. "You could see a second Iamgold, this time with Norilsk. If they can agree on price, this could fly." Rassou holds Gold Fields shares in the $45 billion he helps oversee.
Willie Jacobsz, Gold Fields spokesperson, declined to comment.
Denis Morozov, Norilsk deputy chief executive, said the company was exploring "different options". Norilsk in April said it might spin off its gold business or merge with a rival.
The creation of a company with shares traded in North America or London would enable Gold Fields to expand the assets it owns outside South Africa more rapidly.
Raising capital might be easier and it would not have to approach the central bank for permission when making acquisitions or investing in new mines.
Gold Fields, whose international assets contribute two-thirds to its earnings, had a market value of R33 billion at yesterday's close in Johannesburg. Its shares closed R1.94 firmer at R69.09, while the gold mining sector was 1.58 percent up.