- The newly appointed CEO of Gold Fields, Chris Griffith is seen as the right man for the job.
- Turning around Gold Fields' only remain asset in the country, the South Deep mine, is likely to be one of the new CEO's new responsibilities.
- Gold Fields is currently developing a mine in Chile, which is expected to be completed in late 2022.
Chris Griffith, the incoming CEO of Gold Fields ,who will replace Nick Holland from April, is regarded by the industry as a steady hand to steer the company to new territories and continue the turnaround of its only mine in the country, the South Deep.
Griffith, a mining industry stalwart, joins the firm at a time when gold mining is at a crossroads, with the extraction of available minerals from deep mines posing a financial challenge to companies, in a country with unreliable energy supply. Investment in the sector remains weak, as more companies lean towards modernisation of mining technology.
Turning around the fortunes of South Deep, which has been plagued by years of financial losses is bound to be at the top of Griffith's agenda, with the outgoing chief executive in 2019 having ruled out any possibility of the sale of South Deep, until at least it gets back to profitability.
He said any decision on the future of South Deep mine, which is one of the largest in the world by reserves, would be taken in February 2021, as FIN24 reported.
However, with the current change of leadership, it is unlikely that the company will be in any hurry to make a decision on the future of South Deep.
Its business case has been at the centre of his predecessor's focus, with numerous turnaround strategies put in place during Holland's lengthy time at the helm, including the culling of jobs in 2018, which shaved the workforce by a third.
However, Hollands' efforts have yielded mixed fortunes, as South Deep continues to limp, only posting profit in 2019 after more than a decade of losses, adding $15m in net cash compared to a $146m outflow in 2018.
It is against this background that Griffith's tenure at the company, which has assets in South America, Australia and West Africa, is likely to be consumed by South Deep.
Mining analyst, Peter Major, described Griffith's appointment as a "real coup for shareholders", noting his experience in the local mining scene, mainly with Anglo American.
"If anyone can get it [South Deep] onto some kind of a sustainable keel, I think Chris can. And the payoffs if he's successful will be huge," he said.
Major recalled that Gold Fields "paid a fortune" for the 2006 acquisition of South Deep from a joint venture led by Barrick Gold South Africa, in a $2.5 billion transaction and poured more money into the mine.
"For two decades it has been the most expense aggregate business on earth."
The upswing in the price of gold, for the most part of 2020, has sent stocks skyrocketing and boosted fortunes of companies like Gold Fields and its peers.
Griffith's appointment, according to Major's assessment, should give the company's shareholders some more good years ahead, but he warned that South Deep, with its size and depth, needs a good team to make it sustainable.
A mining engineer by training, Griffith headed Anglo American Platinum from 2012 until April 2020. Prior to that, he headed Kumba Iron Ore for four years, but Gold Fields would be his first time in charge of a gold company.
At Anglo, Griffith drove the initial plans for the expansion of the Magalakwena open pit mine, with his successor Natascha Viljoen crediting him for laying a solid foundation for the business during a low commodity cycle. His experience in leading a company with assets in different geographical zones is not that expansive.
Outside of South Africa, Gold Fields has started the $860m construction of mining infrastructure at its Salares Norte project in Chile, which is expected to be completed in late 2022, with its first gold production scheduled for early 2023.
The mine, which will also produce silver, is set to be one of the group's flagship mines and heading Gold Fields is going to give Griffith a broader hands-on experience in international markets.
Major is adamant that the company won't be putting any money into South Africa and would rather continue to diversify outside and grow the existing international assets and find new ones.
"But South Deep is too precious to not make a real effort to get it right. And the gold price and Chris Griffith can do just that," he added.
In 2013, Gold Fields unbundled its operations, the Kloof, Driefontein and Beatrix mines, which later formed Sibanye Gold.
It remains to be seen if the large scale unbundling of 2013 would be followed by another asset spin-off, in the form of its last mine in the country. In 2020, AngloGold Ashanti sold its last remaining mine, the acclaimed Mponeng Mine, which holds the record of being the deepest gold mine in the country, to focus on its growth markets, including Ghana.
Ghana is now the continent's largest gold producer, a spot that was once held by South Africa for many years, and investors seem to be following the gold, literally.
The sale of the iconic Mponeng mine may have served as a demonstration that no asset is too big or too important when pitted against the weight of financial risk and gains.
Griffith starts his job in April.