Gold industry consolidation seen gathering pace
By Sara Marani
PARIS, June 27 (Reuters) - Gold producers said on Tuesday they expected to see much more consolidation
in a sector that has recently seen a wave of mergers.
Speaking on the last day of the Financial Times gold conference, executives from leading mining companies
agreed that more consolidation was not only inevitable but also desirable.
``More corporate consolidation activity from the major gold producers will surely follow,'' South Africa's Harmony Gold Mining Company chief
executive Bernard Swanepoel told delegates.
``We believe the industry is on a far better footing today compared to five years ago and further rationalisation is expected to take place -- it is inevitable.
We are not in specific negotiations with anyone but are always open to opportunities,'' he later told Reuters.
He expected more regional consolidation, but saw nothing to stop cross-regional mergers taking off, too.
``Investors are truly international, the funds are international and the mining companies will become so. The two big announcements are just the
beginning of cross-boundary international consolidation,'' he said.
Earlier this month a pact between North America's Newmont Mining Corp. (NYSE:NEM - news) and Battle Mountain Gold (NYSE:BMG - news) was
swiftly followed by a merger bringing together Canada's Franco-Nevada Corp. (Toronto:FN.TO - news) and South Africa's Gold Fields Ltd .
``As an industry we have to move away from hedging and focus on giving shareholder value. We must work towards consolidation and marketing,'' said
Wayne Murdy, Newmont's president.
``We have an industry that's sick, it's not returning on its investment,'' he added.
``The bottom line is that it's not keeping pace with financial markets, and capital is going to ultimately be denied. We're not exploring to replace reserves
so production is going to go down. The industry has got to be extremely efficient...I think that will drive consolidation.''
Terry Burges, chief executive of Australian miner Delta Gold Ltd (Australia:DGD.AX - news), told Reuters, ``If there are synergies that are obvious they
have to be considered, but it's got to add value.'' |
