Interview: BRICS to offer more opportunities in mining sector

10:03, April 21, 2011      

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South Africa based gold mining giant Gold Fields Limited on Wednesday said the BRICS partnership has strong investment, acquisitions and merger potential for all South Africa economic sectors, especially the mining industry which is the linchpin of country's economy.

"For South Africa as a whole the BRIC countries could become a major source of investment, merger and acquisition activity, particularly in the South Africa mining sector as these countries require significant raw materials," Gold Fields Limited Corporate Affairs Manager Sven Lunsche said exclusively to Xinhua Wednesday.

Formed in 1998, Gold Fields Limited is a gold mining firm with the amalgamation of the gold assets of Gold Fields of South Africa Limited and Gencor Limited. The company's head office is in Johannesburg.

Asked about the giant mining company's plans to seize opportunities offered the BRICS partnership, Lunsche said "nothing can prevent us looking at gold exploration in the BRIC nations."

"At the moment we are not exploring actively in the BRIC nations though we do have an office in China. Our investment at the moment is limited to exploration spending and there is nothing from preventing us looking at gold exploration in the BRIC nations, " Lunsche told Xinhua.

Listed on Johannesburg Stock Exchange (JSE), the New York Stock Exchange (NYSE), the Euronext in Brussels (NYX) and the Swiss Exchange (SIX) Gold Fields Limited is one of the world's largest producers of gold with production of 3.5 million gold equivalent ounces per annum from nine operating mines in South Africa, Ghana, Australia and Peru.

When Xinhua asked about competition potential that can be caused by BRICS investment in South Africa mining sector, Lunsche said companies from BRIC countries can again emerge as shareholders with the gold mining giant and other mining companies in South Africa.

"Given that we are operating in the gold industry competition is not an issue as we are not competing for consumers – the gold of all gold miners is bought by bullion banks and the price is fixed," Lunsche said

"Gold Fields has had Russian investors during the early 2000s and it is possible that companies from BRIC countries will again emerge as shareholders in us or other miners for that matter. That would be a welcome development," Lunsche added.

According to a 2011 report titled: "Africa: a golden opportunity, A spotlight on mining and metals transactions" by Ernst & Young last year 31 mining and metals transactions were completed by South African-based firms abroad.

The total value of the transactions reached 2.9 billion U.S. dollars. The report says the mining industry in South Africa was negatively affected in 2010 by the ongoing nationalization debate and concerns over licensing.

As the mining sector is the linchpin of the country's economy and government is calling for more investment to be directed to this sector, Lunsche urges the government to deal with regulatory maters that are affecting the industry to attract more foreign investors.

"Government must clarify the regulatory environment. No mining company disagrees with BEE but it must be much more clearly defined. As importantly, it should give preference to mining licenses to the existing mining firm not award different licenses on the same mining property -- no company will invest if there is a danger that another miner can operate on its property," Lunsche said.

Asked if BRICS is another tool to help South Africa deal with job creation and address poverty issues, the mining company official said, "Yes -- the only long-term way to deal effectively with poverty is through job creation and job creation will only happen if investment flows."

According to Lunsche the largest flow of foreign direct investment (FDI) in the world today is from the BRIC countries and as such South Africa will get some funds. "But it must create regulatory certainty in its investment environment to maximize the investment flows."

Source: Xinhua
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