New blood means new focus for AngloGold

AngloGold Ashanti promises to look very different in coming years under the guidance of its new Canadian CEO, Kelvin Dushnisky.

While radical changes to the company would need board and shareholder approval, his vision for the company marks another change in the venerable SA gold miner, which in the past few years has largely discarded its domestic roots.

AngloGold has shut and sold mines in SA in the past year, leaving it with one underground mine, which is the world’s deepest at 4km below the surface, and a tailings retreatment business. The rest of its assets are in the rest of Africa, Australia and South America.

Dushnisky used the word “focus” a lot when quizzed about his vision for AngloGold, the world’s third-largest gold miner. He said the portfolio of 14 mines “feels heavy” and he wants to see more concentration around existing assets where there is geological potential. The vision is already playing out with Sadiola, a long-time AngloGold asset, now potentially up for disposal.

While Dushnisky says SA’s Mponeng is a core mine, it has limited leverage when it comes to consolidating a footprint and for exploration, and there are other gold miners hungry for the tailings treatment business, which becomes a very profitable business once an agreement to supply Franco Nevada with a quarter of the operations output lapses.

With new blood at the helm of AngloGold and with his experience as president of Barrick Gold, for years the biggest gold miner, the company is on a new trajectory and will be one to watch.

Afrimat feels vindicated that its diversification strategy, which has seen the company add bulk commodities to its product offering, is paying off.

Following the acquisition of Demaneng, a small iron ore mine in Kuruman, in the Northern Cape, Afrimat exports iron ore through the channel from Sishen to Saldanha Bay.

Demaneng, an asset that was placed in business rescue in June 2016 after its previous owners experienced financial problems, has become a beacon of hope for Afrimat.

It validates Afrimat’s longstanding strategy to pursue growth diversification.

When it listed on the JSE in 2006, Afrimat’s core competence was in aggregate businesses. Over the years, the company has diversified into industrial minerals, cement products and lime.

Companies diversify for a number of reasons and these include the quest for a balanced and consistent income stream. In Afrimat’s case, a diverse portfolio is also a shield against economic volatility. In the six months ended August 31, Afrimat’s construction materials business felt the brunt of the slowdown in the economy. The industrial minerals business is also susceptible to a slowdown in construction.

The investment in the iron ore mine gives Afrimat access to hard currency earnings, providing a much-needed rand hedge.

With the work to turn the Demaneng mine around now complete, it does not come as a surprise that Afrimat is talking about pursuing growth opportunities, especially in chrome, manganese and coal. But CEO Andries van Heerden says the company is going to take its time in its search for new assets.