Miners Head to South Africa But Leave Checkbooks at Home – by Thomas Biesheuvel and Kevin Crowley (Bloomberg News – February 6, 2017)


(Bloomberg) — With its iconic mountain, beaches and vineyards, it’s easy to attract global mining bosses and fund managers to Cape Town. Yet as thousands of executives, shareholders and officials flock to South Africa for the annual Mining Indaba, the industry’s investments are flowing the opposite way.

A mix of shrinking reserves, rising labor costs, frequent stoppages and regulatory uncertainty has prompted major miners to rethink their presence in the country, home to the world’s largest platinum, chrome, and manganese reserves and the source of one-third of all gold ever mined.

Anglo American Plc, once a keystone of the economy, is selling half its assets in the country, while BHP Billiton Ltd. and Gold Fields Ltd. both spun off their local operations in the past four years. AngloGold Ashanti Ltd. tried to do the same. South Africa, which was the world’s largest gold producer for a century until 2007, has now dropped to sixth place.

“They’re difficult mines in a tough operating environment with wage inflation constantly eating away at margins,” said Neil Gregson, who manages about $2.5 billion of natural-resources stocks at JPMorgan Asset Management in London. “Increasingly, you need specialized management teams to run those assets. We don’t see any growth there.”

About 6,000 attendees are expected at the Mining Indaba, which starts Monday. Executives from companies including Anglo American, Rio Tinto Group, AngloGold Ashanti and South32 Ltd. are scheduled to speak at the event, Africa’s biggest resource industry conference.

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