Anglo remains cautious
MARK CUTIFANI: ENERGY TRANSITION LEADING TO VOLATILE PRICES
CEO says mining company intends to extend the life of the existing thermal assets it holds.
Anglo American probably won’t invest in new thermal coal mines in South Africa as energy transition leads to more volatile prices, Anglo American CEO Mark Cutifani said in an interview on the sidelines of the Joburg Indaba conference which took place in Inanda, Sandton yesterday.
At same time, the company will extend the life of the existing thermal assets it holds and won’t just walk away, he said. Those assets have attracted interest from potential buyers in the past, and the CEO expects that to continue.
Cutifani said he is enthusiastic about opportunities in platinum-group metals (PGMs), and Anglo is undertaking a full feasibility study on the Mogalakwena
concentrator. The company is committed to investing in the Venetia diamond mine, although the project has to do better, he said.
Here are three highlights from the conference. Anglo CEO says investors need stability
Cutifani said there is no shortage of geological opportunities in South Africa, but to attract mining investment requires political stability and regulatory clarity. While encouraged by positive improvements in the political arena, the “parlous state” of public finances remains a challenge, according to Cutifani.
The CEO said companies must work with the government to tackle “unresolved issues” in the nation’s Mining Charter, which seeks to address inequalities resulting from apartheid.
The multiplier effect of growing the mining industry – which currently supports about 4.5 million people – could drive a “wholesale economic renewal of South Africa”. Still, Cutifani cautioned that abundant and high-grade deposits won’t guarantee investment.
“There are many other factors besides mineral endowment that influence where investors decide to put their money, all of which drive reassurance to investors about the security of their investment over time,” he said. Amplats CEO sees good PGM fundamentals Anglo American Platinum CEO Chris Griffith said fundamentals for platinum-group metals will remain good for a “number of years.” The improving market has enabled producers to increase their profitable supply and has drawn greater interest in platinum stocks from international investors, he said. The company known as Amplats is studying a number of projects for its “next wave of growth”, according to the CEO. The regulatory environment in South Africa has improved, but the government needs to resolve
the issue of community disruptions around mines, which is leading to huge losses for producers, Griffith said. Labour disruptions, crime and xenophobia are deterring investors, while policy differences between government and ruling ANC are also a concern, he said. Implats won’t invest in greenfield projects
Impala Platinum isn’t planning to invest in new development projects and building a new mine wouldn’t likely get support from the board, according to CEO Nico Muller. He said investors are favouring lower risk operations that can quickly generate cash.
The CEO added that the company has some lower cost investments in mechanised projects on its radar screen. Conference continues
South African mining executives, investors and officials are gathering in the nation’s economic hub for the conference to discuss the industry’s investment prospects after years of regulatory uncertainty.
The Joburg Indaba continues today. – Bloomberg
‘Parlous state’ of public finances a challenge