AngloGold's JSE Top 40 Exit Marks End of Era for South Africa

  • Three mining stocks remain in index for largest companies
  • AngloGold's exit follows Impala, Kumba earlier in 2015

AngloGold Ashanti Ltd. is poised to exit the index for the Johannesburg Stock Exchange’s 40 largest companies, leaving the gauge devoid of any producers of the precious metal that provided a cornerstone for the industrialization and growth of South Africa’s economy.

The world’s third-biggest gold producer will be excluded from the FTSE/JSE Top40 Index from Dec. 21, the exchange said in a statement on Wednesday, after a 74 percent plunge in the value of the stock since the beginning of 2012. BHP Billiton Ltd., which has no operations in South Africa, Anglo American Plc and its Johannesburg-based platinum unit will be the only mining stocks in the gauge. Sasol Ltd. uses the coal it mines to produce motor fuel.

Gold output by South Africa, whose Witwatersrand Basin is the source of about a third of all bullion mined, slid at the fastest pace among the 10 biggest-producing countries in the past decade. Production halved over the period to about 145 metric tons last year as grades declined, shafts became deeper and operating costs such as labor and electricity rose at a faster pace than inflation.

Gold mining in South Africa has been “permanently impaired,” Peter Major, a mining analyst at Cadiz Specialized Asset Management in Cape Town, said by phone. “We were the Silicon Valley of gold mining and took the rest of the world out of business -- that is history now.”

Mining stocks that exited the Top 40 Index earlier in 2015 include Impala Platinum Holdings Ltd., the world’s second-biggest producer of the metal, and Kumba Iron Ore Ltd.

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