AngloGold Ashanti Ltd. and Gold Fields Ltd. may have their credit ratings cut to junk, Standard & Poor’s said, as strikes halted as much as half of South Africa’s production of the metal.
Business risks “increased in light of continuing strike action in South Africa and the possible implications of increasing social tensions for the mining industry,” the company said in a statement today. It also revised its outlook on Anglo American Plc’s rating to negative from stable.
Stoppages have halted gold, platinum, chrome and iron-ore mines in the country since Lonmin Plc awarded workers pay increases of 11 percent to 22 percent last month to end a six-week unauthorized strike in which about 44 people were killed.
S&P last week lowered South Africa’s sovereign rating one step to BBB, in line with Brazil, Russia and Mexico, “to reflect the deterioration in the social and economic environment.”
AngloGold’s dollar-denominated bonds due in May 2022 erased gains, with the yield rising one basis point to 4.90 percent by 5:22 p.m. in London. Gold Fields’ dollar debt maturing in October 2020 pared earlier increases with the yield dropping one basis points to 4.90 percent.