AngloGold (ANG) Ashanti Ltd., the third- largest producer of the metal, scaled back plans to extend the world’s deepest mine, saying it’s moving away from larger-scale South African projects to hasten returns and cut risk.
The proposal’s duration was “too long and as a consequence the return is not justified,” Chief Executive Officer Mark Cutifani said in a phone interview yesterday. Instead of a $3 billion, 10-year program for a new shaft at Mponeng mine, AngloGold will ask its board early next year to approve using ramps to access deeper levels, Mike O’Hare, the company’s executive vice president for South Africa, told investors.
To meet an output target of 5.5 million ounces of gold by 2015, AngloGold is speeding up expansion outside South Africa, its base, where increasingly deep and difficult operations are required to exploit aging ore bodies. The Johannesburg-based company has had success in finding new reserves in countries including Colombia and the Democratic Republic of Congo.
Phased expansion needs less capital, is “a lot less risky and allows us to be more confident as we go,” O’Hare said. “It may not be the most efficient over a very long period, but certainly over the four-year period it is more effective.”
South African operations aim to “maintain a stable base” of around 1.7 million ounces over about the next four years, and Americas output may more than double to about 1.9 million ounces in 2020, a copy of yesterday’s investor presentation shows.
In the rest of Africa, mines will be speeded up, possibly yielding about 3 million ounces by 2020, from 1.5 million to 1.7 million ounces in 2012-13. Australian production may double from 2014 levels to about 1 million ounces “in the longer term.”
AngloGold split up Mponeng’s deepening beyond 2.4 miles (4 kilometers) into four phases, with the $298 million first stage under way and a second that may cost $520 million, according to the presentation.
Cutifani said he didn’t expect South Africa to introduce a policy of mine nationalization. The ruling African National Congress agreed last year to study the idea after a call by Julius Malema, its youth leader. Malema was suspended by the ANC this month for undermining party unity, which he is appealing.
“My view is that nationalization will not be on the agenda,” Cutifani told investors. “The country can’t afford it. It’s just not practical.”
AngloGold slid 1.9 percent to 367.66 rand by the 5 p.m. close in Johannesburg, paring the year’s gain to 12 percent.
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