Over the course of human history, gold (XAU/USD) has played a wide range of tangible and financial roles. Whether as a means of exchange, artisan medium, or store of wealth, acquiring bullion piques the interest of people from all walks of life.
South Africa (SA) is among international leaders in gold exploration and production. Surveys from Thomson Reuters show SA to rank 8th globally in production of bullion, just ahead of Mexico and below Peru. South Africa's Witwatersrand Basin is considered to be the world's largest gold resource; operations in this region contribute to SA's 95,130 mining sector jobs. In recent years, South African gold production has decreased, falling to 4.2% of aggregate global production.
Like all commodities, the supply and demand curve largely dictates gold's value. On the supply side, bullion is not easily found in nature. It's estimated to make up a miniscule 0.001 to 0.006 parts per million of the Earth's crust. Given its scarcity, gold has always had value regardless of economic cycle or stocks-on-hand. Accordingly, the cultivation of new stores has been the driving force of the mining industry, specifically in developing economies.
Top Three South African Gold Mining Companies
Beginning in the late 1800s, SA has been a renowned participant in the global gold trade. Throughout the 1900s, major strikes spurred the growth of production centers Johannesburg and Egoli. During this period, gold mining became a booming industry in SA, bringing the nation to the forefront of global production. Bullion output peaked in 1970, with the nation generating around 1000 metric tonnes annually.
After 1970, the SA mining sector experienced a steady decline. Rising costs of extraction and civil unrest contributed heavily to decreasing production. By 2018, SA's national gold output measured 130 metric tonnes per year—a fraction of what it was roughly 50 years earlier.
Nonetheless, throughout the cycles of boom and bust, several elite South African gold mining companies have stood the test of time. AngloGold Ashanti Limited, Gold Fields Limited and Sibanye-Stillwater have become key figures in the industry.
1. AngloGold Ashanti Limited
Since 1998, AngloGold Ashanti has been a leading player in South Africa's gold mining industry. AngloGold is the end product of the century-old Anglo American Company consolidating its uranium and gold mining enterprises. Upon completing restructuring, AngloGold Ashanti became the first SA company to be listed for trade on the New York Stock Exchange (NYSE).
Beginning in 2006, parent company Anglo American began selling equity in AngloGold. Anglo American eventually liquidated its interest in 2009. According to self-disclosure, AngloGold is a publicly-held independent producer.
Below are a few relevant facts local to AngloGold Ashanti:
- The current form of AngloGold Ashanti came to be through the 2004 merger of AngloGold Limited and Ashanti Goldfields Company Limited.
- Corporate headquarters are located in Johannesburg, SA.
- The company's core businesses are international in scope, featuring 14 projects located in nine countries. In addition to operations in SA, AngloGold is present in Argentina, Australia, Brazil, Ghana, Guinea, Mali, Congo and Tanzania.
- AngloGold Ashanti ranks as the third-largest gold mining company in the world.
Shares of AngloGold Ashanti are listed for public trade on the Johannesburg Stock Exchange (JSE), Australian Stock Exchange (ASX) and the NYSE. Share codes are ANG (JSE), AU (NYSE) and AGG (ASX). As of May 2020, AngloGold Ashanti held a market capitalisation of US$10.85 billion.
2. Gold Fields Limited
The origin of Gold Fields Limited dates back to 1887, when Cecil John Rhodes and Charles Rudd founded Gold Fields of South Africa. One of the country's oldest gold mining companies, its modern incarnation came to be with the 1998 Gold Fields of South Africa/Gencor merger. The new entity was briefly known as Goldco, before being renamed Gold Fields Limited.
In 2002, Gold Fields was listed on the NYSE for public trade. With a mission statement of being the "global leader in sustainable gold mining," the company has risen to a prominent position in the mining industry.
The following are some of the vitals for Gold Fields Limited:
- Corporate headquarters are in Johannesburg, SA.
- Gold Fields Limited is a globally diversified company with nine active mines. Projects are located in Australia, Peru, South Africa, West Africa, the Philippines and Chile.
- Gold Fields ranks as the seventh largest gold producer in the world.
Gold Fields Limited is a publicly traded company, with shares offered primarily on the JSE. Secondary listings are available on the NYSE. Share codes are GFI (NYSE) and GFIE (JSE). As of May 2020, Gold Fields Limited held a market cap of US$6.4 billion.
The youngest of the SA gold mining heavyweights, Sibanye-Stillwater began in February 2013 as Sibanye Gold Limited. Originally a subsidiary of Gold Fields Limited, Sibanye Gold aggressively pursued a growth-oriented business model. Following extensive acquisitions of SA resources, Sibanye Gold purchased the U.S.-based StillWater Mining Company in 2016 for US$2.2 billion. Upon the transaction being completed, Sibanye-Stillwater was formed.
Although Sibanye-Stillwater is the world's premier platinum producer, it is also among the leaders in gold production. A majority of bullion-specific projects are located in and around the Johannesburg, SA area.
Sibanye-Stillwater is a prominent name in the mining industry, featuring several attributes worthy of note:
- The company does not have a traditional headquarters, but it does have a registered office Weltevreden Park, SA.
- Operations are diverse, including mining projects in the U.S., SA and Zimbabwe.
- Sibanye-Stillwater is the world's largest primary platinum producer, second largest palladium producer and a top-tier gold producer.
Sibanye-Stillwater is a publicly traded company, with shares being listed on the JSX and NYSE. Stock symbols are SSW (JSE) and SBSW (NYSE). As of May 2020, Sibanye-Stillwater held a market capitalisation of US$5.18 billion.
While AngloGold Ashanti, Gold Fields and Sibanye Stillwater are the largest SA gold mining companies, there are others active in the industry. A few of the most notable are Harmony Gold Mining Company, Pan African Resources and Village Main Reef.
Until 2009, SA stood as the global leader in gold production. Since then, reserves have become exhausted. Also, periods of labour unrest and depressed pricing have undermined SA's competitive edge. Moving into the future, the viability of SA gold mining companies will depend upon asset and operational diversification.
Senior Market Specialist
Russell Shor (MSTA, CFTe, MFTA) is a Senior Market Specialist at FXCM. He joined the firm in October 2017 and has an Honours Degree in Economics from the University of South Africa and holds the coveted Certified Financial Technician and Master of Financial Technical Analysis qualifications from the International Federation…