| Wed 16 Jul 2003, 11:50 | | AngloGold subsidiary may up its investment in Sout |
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AngloGold subsidiary may up its investment in South America to $145m
July 16, 2003
By Reuters
Rio de Janeiro - The AngloGold subsidiary of gold miner Anglo American could more than double investments in South America next year if a big Brazilian project got the green light, a top official said.
Roberto Carvalho Silva, the president of the Brazil-based unit, said new investment could reach $145 million with the Cuiaba expansion project, which the company was studying and which still needed board approval.
"This compares with investments of $60 million this year, including equipment replacement, new projects and mineral prospecting, a value 50 percent up on 2002," he said.
No date has been set for a decision on the expansion of Cuiaba, which is a part of AngloGold's mining subsidiary Mineracao Morro Velho.
Company sources were optimistic about approval for the $105 million project, given the new climate of foreign investor confidence in Brazil.
Carvalho Silva said that, if approved, the project would allow the mine's capacity to increase to 4 000 tons of ore a day in 2006, compared with 2 300 tons now.
That would bring average annual gold production up to 300 000 ounces from 180 000 ounces.
AngloGold South America expects to maintain its gold output in the continent at about last year's level of 650 000 ounces for this year and the next.
This includes production from Mineracao Serra Grande in Brazil's Goias state, which produces 193 000 ounces a year and should reach exhaustion in several years' time, and from Argentina's Cerro Vanguardia mine, which is 92
.5 percent owned by AngloGold.
Cerro Vanguardia produces 900 000 tons of ore a year and a feasibility study into its expansion to 1.2 million tons is under way.
A drilling programme is to start in the second half of this year at the Gandarela project in the state of Minas Gerais, under a newly formed joint venture with Canadian precious metals miner Iamgold, which is a partner of AngloGold at two mines in Mali.
Carvalho Silva said Brazil had "great potential in gold mining". The present was favourable for gold as the mining sector was preparing for projected effective growth in Brazil from next year.
The discussion in Brazil about raising mining royalties was "totally misplaced", he said.
"The proposal merely aims to generate resources to overcome public sector deficits of dubious quality generated by state administrations," he said.
It did not take account of the social returns provided by the mining sector, "often in remote areas where basic infrastructure is usually funded by the investing companies themselves".
Carvalho Silva said while gold prices had recovered to a nominal $350 an ounce in the first half of this year, compared with $255 in 1999, mining costs had increased significantly due to the rise in value of other currencies against the dollar. AngloGold closed R5 down at R2254.46 in Johannesburg yesterday.
