Gold Fields CEO Chris Griffith judges SA ex-growth for gold as industry margins shrink

Gold Fields CEO, Chris Griffiths

SOUTH Africa is still a good destination in which to go mining for a number of commodities but not gold which is why Gold Fields had diversified out of the country.

That’s the assessment made by Gold Fields CEO, Chris Griffith who was taking part in a panel discussion at the Joburg Indaba conference being held in Johannesburg. He pointed out that major investment was being ploughed into commodities such as platinum, manganese, chrome and even coal but not into gold.

“Gold in South Africa is a mature industry. The opportunities for gold are not the same as for other commodities in the country. For South African gold miners the opportunities are international.

“The more productive, shallow, open pit operations are not in South Africa. Even with underground operations the margins you can generate offshore are substantially higher than those in South Africa.

“So we have not diversified because we don’t trust South Africa and can’t operate here. It’s because the South African gold industry is mature. The massive investment being ploughed into other mining industry sectors in the country shows that South Africa is a mining-friendly enough jurisdiction.

“This is not the toughest place to work. You can generate returns here; you are protected by the judiciary, and you can get your money out. You would not believe it – living in South Africa – but relatively speaking the country has tax and fiscal stability that is quite unique in the mining industry globally.

“But we are not naïve. There are challenges here. The mining regulatory regime is not the most friendly regime out there nor is it the most stable regulatory framework out there.  Then we have the problems with crime and Eskom and Transnet and the municipalities.”

Griffith acknowledged that jurisdiction was a critical factor when investors and mining companies looked at countries where projects were located and it affected their valuation.

“One of the things I have learnt from my involvement in the mining industry is that the best grades are always in the worst place. This is a universal truth. Nothing comes for free”.

Griffith added this assessment applied to a major, high grade, copper/gold porphyry project Gold Fields was currently looking at developing but which was located in Argentina.

“So we will have to do the kind of things we did when we invested in Chile which is to get assurances of fiscal stability and that you can get your money out of the country otherwise you cannot invest. Some governments get that, some don’t. So Argentina is a challenge for us and time will tell if we will be able to invest.”

Also taking part in the discussion was Sibanye Stillwater CEO, Neal Froneman who commented: “South Africa is a challenging jurisdiction. Clearly, we know how to prosper here but I just wish it was not so difficult”.