Johannesburg - Mark Bristow, South African-born founder and chief executive of Randgold Resources, foresees a looming supply problem in the gold industry, saying that there was not enough exploration to replace gold that was being produced.
Speaking to journalists in Johannesburg yesterday, Bristow, said gold miners had to put effort into finding more quality ounces.
“To keep the gold industry supplied we need to discover 90 million ounces a year. We are only discovering 10 million to 15 million ounces a year. We either have to discover more quality ounces or reduce the life of mines,” said Bristow.
Changed fortunes
Bristow noted how the $300 (R4 102) rise in the gold price in the past eight months had changed fortunes of the industry. This as gold mining houses were now able to pay off their debt since the bullion gained 26 percent so far this year as investors sought a safe haven amid concerns about the Federal Reserve hiking interest rates.
“The only way that the industry will deliver what it has delivered in the past 8 months is to have another increase in the gold price, but it will be impossible for the gold price to go up as it did over the past 8 months,” he said.
Bristow unpacked reasons for pulling out of its partnership with AngloGold Ashanti to redevelop the Obuasi Gold mine in Ghana.
He said the London and Nasdaq-listed company, which operates successful mines in west Africa was not able to make the $1 billion mine work, citing technical and commercial challenges.
Bristow blamed the mine’s predecessors as being inefficient. “There was no licence to operate, there were major environmental issues and the social licence to operate was scary,” said Bristow.
“We were very concerned about illegal mining and the lack of government support to deal with the illegal mining,” said Bristow.
“We have made many attempts to invest in Ghana, but we were rattled by the political interference. The social risks was enormous,” said Bristow.
Randgold, the most mechanised gold producer in Africa, had discovered successful mines in the past 20 years and outperformed its peers.
“We have no debt, we have not cut a dollar in capital and we have not retrenched anyone. Our plan is to be profitable at $1 000 an ounce gold price,” said Bristow.
BUSINESS REPORT