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February 11, 2013 4:51 pm
Gold is not the only mining sector facing tough times.
The travails of platinum producers were graphically brought to the fore during the wave of wildcat strikes in South Africa last year. And across the industry mining houses have been licking their wounds after spending heavily during the commodities boom of the first decade of the 2000s.
It has been a “tumultuous period” of “extreme volatility”, says Cynthia Carroll, the outgoing chief executive of Anglo, one of several chief executives who are moving on, referring to the economic cycles of recent years.
“When we were all riding high and everything looked fantastic and growth would continue indefinitely, starting in China, everybody was encouraging companies to spend,” she told the FT.
But now the industry has to “respond to the call from investors who are saying we are not going to invest if you keep spending”, she added.
“Capital intensity is going up and up, and I don’t think necessarily that the market, or investors, understand the [complexity] of delivering projects.”
She said that Anglo would now be prioritising brownfield projects as opposed to greenfield, and predicted more partnerships in developing the costlier and longer term mega projects.
“You have to have the large projects because you have to get the scale. It’s going to be more, probably, about sharing ownership.”
She believes the outlook for the industry is “very positive” in the medium to longer term, but adds: “I think the short term will bring continued challenge and that challenge is because of the economic uncertainty led by Europe, but also the slowdown in Asia.”
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