London, England — MININGREVIEW.COM — 12 November 2009 – The South African government is expected to reject the proposal by power utility Eskom to triple tariffs, partly because of the impact this would have on the gold sector, says AngloGold Ashanti chief executive Mark Cutifani.
Suggesting this in an address to the RBC gold conference here, he went on to say that up to 1 million people, including workers in the sector and dependents, were likely to suffer if the Eskom proposal to hike tariffs by 45% a year over the next three years was implemented.
“As a consequence I do not believe the Eskom 45-45-45 proposal will fly,” Cutifani added.
“Certainly the indications we’ve had from within government are that they understand the problem.”
Power rates would likely double over three years instead of triple as under the Eskom proposals, he said, and the rand was strengthening, meaning that it was all the more important to boost efficiency in South Africa by about 30% over three years.
Cutifani estimated that a doubling of rates would lead to a 10% hike in cash costs for AngloGold “’ the world’s third biggest gold producer and Africa’s largest.
He revealed that an efficiency and restructuring drive was due to cut the AngloGold workforce in South Africa by 5 000 to 10 000 people over the next five years from 30 000, but emphasised that forced layoffs would be avoided.
Earlier this month the group lowered its full-year guidance to between 4.7 million and 4.8 million ounces from its original target of 4.9 million to 5 million.