A warning about the inevitable decline of South Africa’s gold mining industry does not appear to have deterred Barrick Gold Corp. [ABX-TSX, NYSE] President Kelvin Dushnisky from leaving the world’s leading gold miner to join Johannesburg-based AngloGold Ashanti Ltd. [AU-NYSE, AGG-ASX, ANG-JSE].
Dushnisky has been named Chief Executive Officer and an Executive Director at AngloGold in a move that takes effect on September 1, 2018, AngloGold said in a press release Monday July 23.
“Following an extremely competitive global search, we’re pleased to name someone of Kelvin’s calibre and experience to lead this organization,” said AngloGold Ashanti Chairman Sipho Pityana. He replaces outgoing CEO Srinivasan Venkatakrishnan, who departs at the end of August, 2018 for a role at Vedanta Resources Ltd. [VED-LSE].
AngloGold Ashanti is South Africa’s largest gold producer by market value.
News of Dushnisky’s appointment comes after Pityana warned that South Africa’s gold industry, once the world’s largest, faces an inevitable decline.
Output will continue to shrink as miners chase ever-deeper ore bodies while struggling to keep costs down, he told Bloomberg News Service.
“Gold is a sunset industry,” Pitanya said during an interview in Bloomberg’s Johannesburg office. “It doesn’t matter what you do, it doesn’t matter how you do it, you are not going to be able to change that.”
That’s because South Africa’s gold mines are the world’s deepest and among the most labour intensive, he explained. Bloomberg said the country’s gold production dropped 16% in May from a year earlier, falling for the eighth straight month, as aging infrastructure, depleted reserves and accidents raise costs and curb output.
It was precisely because he saw this coming that the late Peter Munk launched Barrick in 1983. His aim was to offer an alternative to South Africa, by giving gold investors to opportunity to invest in a large North American-based gold miner.
After an impressive run of success, Barrick has recently experienced problems of its own, including the need to halt construction at the Pascua-Lama gold project which straddles the border separating Chile and Argentina following an investment of US$5 billion in the project.
Construction on the Chilean side of side was halted in the second quarter of 2013 after a court injunction was filed by indigenous communities concerned about potential water supply contamination stemming from construction activities.
No date has been set for construction to resume.
Since his appointment as President of Barrick in 2015, Dushnisky held direct responsibility for Barrick’s overall business and the execution of its operating plans and strategic priorities. This role included oversight of Barrick’s activities across Australia, Africa, the Middle East, North America and South America.
He also held responsibility for Barrick’s relationships with host governments, local communities and other external stakeholders.