Local operations top Gold Fields’ portfolio

From this year, Gold Fields’ Ghanaian operations will be the largest contributor to the multinational mining company’s production and earnings after the company spun-off two of its older South African mines, KDC and Beatrix, into a separately-managed and listed company, Sibanye Gold. 

 

Without the South African mines, the two Ghanaian mines in the portfolio -- Tarkwa and Damang -- would have accounted for 43 percent of Gold Fields’ production in 2012, Ghana Country Manager Pierre Coussey said at a presentation in Accra on the company’s 2012 results. 

Gold Fields’ Australian production accounted for 29 percent, Peru 15 percent and the company’s only remaining South African asset -- the developing South Deep Project -- 13 percent.

Even when South Deep comes into full production in 2016, the Ghanaian mines are still expected to be the largest contributor with an estimated 35 percent. 

“Ghana has always played a significant part in Gold Fields’ overall portfolio. Now that they are the largest contributor to the company, they will receive even more dedicated focus,” Peet Van Schalkwyk, Executive Vice-President and Managing Director of the Ghana operations, said.

The Ghanaian operations also account for the second-largest mineral reserve-base of Gold Fields, with 14 million ounces of gold out of a total 64 million ounces. 

Mr. Coussey said the Tarkwa mine is considering its sixth expansion phase, while the Damang Mine is in transition and will require significant recapitalisation during 2013 and 2014.

He noted, however, that the extent to which the company invests in its Ghana operations will depend on the country’s fiscal regime and a successful outcome of its negotiations with Government to reach a favourable tax-stability agreement. 

“I am hopeful that we are going to arrive at a win-win deal for everyone: more tax into the coffers for the government, potentially more jobs at our mines and a healthy return for our investors,” he said.

Gold Fields’ gold production decreased by 7 percent from 3.49 million ounces for the year ended December 2011 to 3.25 million ounces for the year ended December 2012.

However, revenue for the group decreased by 4.3 percent from US$5.8billion to US$5.55billion. Mr Coussey cautioned, though, that the revenue should not be taken in isolation but pegged against the company’s operating costs. 

Taxes in Ghana in particular, he said, have gone up significantly in the last couple of years, while power costs have also been rising.

Net operating costs for the group increased by 18 percent from US$2.88billion to US$2.99billion. Total cash cost increased by 28 percent from US$795 per ounce to US$894 per ounce due to a decrease in gold sales and the increase in net operating costs. 

Mr. Coussey indicated that Gold Fields was Ghana’s largest corporate-tax payer in 2012, paying just over US$250million in direct taxes, royalties, and dividends to the government.       

He further noted that in its efforts to provide benefits to all stakeholders, the company has made significant investments in the communities adjacent Tarkwa and Damang, spending more than US$4.5million on community projects last year. 

“While the company’s new global strategy is to focus on cash-generation, a key focus area is sustainable development -- and that means taking care of our employees by way of training, and the communities in which we operate, so we can leave a legacy of economically viable and sustainable projects that contribute to the overall GDP of Ghana,” he said.

source: B&FT