AngloGold Ashanti keeping close watch on inflation
Gold mining company AngloGold Ashanti is keeping a close watch on inflation, the company’s CFO Christine Ramon said on Monday, when the company reported higher costs that reflected a significant reinvestment phase.
Newly appointed AngloGold CEO Alberto Calderon who has prioritised reductions in all costs, improvements in operating and capital efficiencies and the implementation of a new operating model, described the state of the company as not realising its full potential.
Cumulative inflation for the year to date is estimated at around 5% for the group, driven predominantly by the current level of the Brent Crude oil price, higher freight and logistics costs, higher steel and heavy equipment pricing, some bulk consumable pricing and competition for scarce resources, particularly labour in key jurisdictions including Brazil and Australia.
“We are focusing on the retention of critical skills and strengthening the necessary training and graduate programmes for succession planning. We also continue to proactively monitor global supply chains to maintain resilience and continuity of supply and did not experience any material negative impacts of supply shortfalls during quarter three,” Ramon said during the Johannesburg- and New York-listed company’s third-quarter results presentation covered by Mining Weekly.
Owing to partnerships on global spend categories as well as stocking strategies at its operations, the company, Ramon said, had benefited from a delayed inflation impact.
“However, we’ve seen increasing cost increases in the third quarter of 2021 and anticipate continued pressure throughout the remainder of 2021 and into 2022,” Ramon said.
She cited key risks facing the business as including inflationary pressures, the continued spread of Covid-19 and higher-than-normal employee turnover rates.
In Brazil, AngloGold Ashanti’s tailings facilities are currently being converted to dry-stacking operations in advance of decommissioning the existing tailings facilities.
This programme, taking place amidst the Covid pandemic, is leading to increased competition for skills and engineering resources, which has resulted in an increase to the planned investment to complete the conversion by the legal deadline.
Current estimates indicate the capital expenditure required in 2021 to implement this new technology will not exceed $150-million and the work on this is expected to continue through 2022 to 2025.
“Based on preliminary estimates to date, we anticipate that the annual capital expenditures for each of these years, whilst still material, will be significantly less than in 2021, and will decline over time,” Ramon calculated.