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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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From: Proud Deplorable	8/8/2008 10:55:53 AM
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Gold output alert * Barry FitzGerald * August 9, 2008 * THE $12 billion local gold industry is in crisis, according to the Australian executive who now heads South Africa's AngloGold Ashanti, Mark Cutifani. AngloGold is also a big gold producer in Australia and has stakes in the country's best hope of holding on to current production levels, the Boddington and Tropicana projects in Western Australia. But Mr Cutifani told a Melbourne Mining Club lunch that there had been a 20% decline in Australian production in the past 10 years and it could fall another 20% in the next five years. He said there was a "whole range of things from a policy point of view" that had created a "significant" sovereign risk issue for Australia. They included access to land, the cost of doing business and, more recently, the looming burden on the industry from the Federal Government's carbon emissions trading plans. Mr Cutifani has said that the carbon trading plan could cost a project like Tropicana as much as $US30 an ounce. While he believes Tropicana will be developed, the additional burden for a project already loaded with infrastructure challenges had to be viewed against alternative investment opportunities in more friendly investment climates overseas. AngloGold, the world's third-biggest gold producer, brought in Mr Cutifani as a change agent. He has enjoyed initial success in having the group meet production forecasts and in improving a poor safety record at its South African operations. In the June quarter, AngloGold was fatality-free for the first time in more than 100 years of South African mining. Mr Cutifani's experience in takeover battles when working for nickel group Inco in Canada could also be called on soon. Anglo American has a 16% shareholding left to divest and it could be used as a springboard for a takeover. But Mr Cutifani said that prospect did not worry AngloGold much. "Generally the people who have contacted us to talk about possibilities are people who have seen it as a good investment, not as a starting point for something broader," he said. kitco.com

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