Support for SA gold industry consolidation more than just shareholder returns, says PIC

ANY consolidation of South Africa’s gold sector had to benefit the country, said Bloomberg News citing the Public Investment Corporation (PIC).

Mdu Bhulose, portfolio manager for mining and resources at the money manager – the country’s biggest – said his company had a broader mandate than purely shareholder returns. It also considers potential job losses, the welfare of communities in which mining companies operate as well as the interests of the broader South African economy.

That will affect the way it assesses proposals, he told Bloomberg News.

Bhulose’s comments come amid speculation that Johannesburg-based Anglogold Ashanti and Gold Fields could be takeover targets for foreign buyers because of their relatively low valuations, said Bloomberg News.

Neal Froneman, CEO of Sibanye Stillwater, has said the three companies should combine to avoid being bought by companies based elsewhere.

“Is this going to be a value-destructive deal for the country?,” Bhulose said of the PIC’s approach to potential takeovers in an interview with Bloomberg News. “We look at returns, but also what impact it will have for all other stakeholders.”

The PIC is the biggest shareholder in AngloGold Ashanti, holding 11.9%, and the second-largest in Gold Fields with 9.6%. In Sibanye, its 15.9% holding is the biggest of any investor, said Bloomberg News.

Newmont Corporation, the world’s biggest gold miner by market value, has a price-to-earnings ratio that’s more than double both AngloGold and Gold Fields, highlighting the discount at which the South African producers trade, the newswire said.