AngloGold Ashanti to cut corporate costs, scale back projects

South African gold miner AngloGold Ashanti has announced plans to cut non-mining, corporate jobs and scale back, suspend or sell marginal mines to cope with a low gold price.

The world's third-largest gold miner reported a $2.4 billion impairment in its interim results and a loss for the June quarter.

"We have adopted a decisive, two-pronged response to this weaker gold price environment, focused on revenue enhancement and improving efficiencies by addressing costs at a number of levels," said new chief executive officer Srinivasan Venkatakrishnan, appointed in May. "Our two important new mines are expected to contribute approximately 550,000oz to 600,000oz of new annual production next year at below our current average cost, improving the group's cash cost and cash flow profile."

Anglo is following its global peers who, in the face of a low gold price, have declared write-downs in the value of their assets.

It is also still feeling the effects of a lengthy strike last year that cost the gold sector R5 billion in lost revenue.

Falling productivity and rising electricity costs have added to financial difficulties.

Production for the three months to June 30 was 935,000oz at a total cash cost of $898/oz, compared to 899,000oz at $894/oz the previous quarter.

AngloGold was setting up its business to cope with a base case of $1,100/oz, but also with prices below $1,000/oz.

Image: © AngloGold

Copyright is owned by Africa Outlook and/or Outlook Publishing. All rights reserved.