[miningmx.com] – GOLD Fields is to conduct a strategic review of its
South African and international operations, which could result in scaling down
production in an effort to chase margin over volumes.
Nick Holland, CEO of Gold Fields, said the strategy might also inform the group’s
future merger and acqusition and exploration strategy, with the focus of future
production being drawn from smaller mines that the group might not have
considered appropriate before.
“We’re not saying we intend to completely turn around our strategy, but we are
saying there’s no point is producing gold that doesn’t provide a return,’ he said in
response to questions following the group’s June-quarter results presentation.
“We’re exploring whether we should build 150,000 oz/year operations such as Cerro
Corona. If it makes money, what’s wrong with that?’ he said.
Holland added that all of the world’s major mining companies had, for years, enticed
shareholders on the promise of production that was “growing to the moon’.
“The aim is not to get fixated with the size of the portfolio.’
The strategic review, which is separate from a business improvement initiative
aimed at more granular, operational improvements, comes amid the resignation of
two of the gold industry’s CEOs following failed merger and acqusition strategies.
Holland said the new breed of fund manager, which was new to gold, worked like
private equity. “We’re not kidding the money with our promises; the only people we
are kidding are [host] governments, who think the gold companies make huge
amounts of money,’ Holland said.
Costive approaches to capital spend is not restricted to the gold sector. Marius
Kloppers, CEO of BHP Billiton, told investors earlier this week that the group had cut
back its capital expansion programme by up to $80bn, and that the company had
always pursued a “tough love’ approach to assets that did not make money.
Holland said Gold Fields’ review would not mean the group would sell off major gold
operations for which it is globally known. For instance, Gold Fields is applying the
finishing touches to the expansion of South Deep, a proposed 700,000 oz/year gold
mine on South Africa’s Witwatersrand gold fields.
