Melbourne- Gold production will see significant cuts in response to the tumble in the metal’s price, according to Anglo American chief executive Mark Cutifani, who previously ran Africa’s largest producer.
“I don’t see the gold price staying low for a protracted period of time because the drop in production that will occur will be quite significant and will surprise everybody,” Cutifani said today in an interview in Canberra.
He left his position leading Johannesburg-based Anglogold Ashanti in April, when he took up his post at London-headquartered mining company Anglo American.
Gold producers from Toronto to Melbourne are reducing production, costs and staff as bullion heads for its biggest annual decline since 1981.
After reaching a peak of $1,921.15 an ounce in September 2011, the metal fell into a bear market in April and is now trading at $1,244 an ounce.
Australia’s largest gold producer Newcrest Mining said this month it would probably write down the value of its assets by as much as A$6 billion ($5.5 billion) in response to falling prices, as well as cutting spending and about 400 jobs.
Canada’s Barrick Gold, the world’s largest producer of the metal, said this week it will cut about 100 office jobs due to gold’s slump.
“It’s going to be a terrible quarter for the industry,” said Cutifani, who said he holds gold in his own investment portfolio.
“The industry is going to have to adjust very quickly.”
Credit Suisse expects gold prices at $1,150 in 12 months, while Bank of America Merrill Lynch has said the metal may drop to $1,200 in coming weeks.
“I don’t know whether it will be in six months, a year, three years,” Cutifani said.
“The position will flip back and gold will reassert itself.” - Bloomberg News