South Africa’s last bullion blue-chip battles relegation

JOHANNESBURG – The Johannesburg stock market, the capitalist heart of South Africa’s ‘City of Gold’, is close to relegating the last bullion producer in its bluechip index, the latest sign of the precious metal losing its place in an economy it once dominated.

In its latest quarterly review of stocks on its benchmark Top-40 Index, the bourse put AngloGold Ashanti at number 38, clinging to membership of an index now dominated by banks, technology companies and diversified mining firms.

Should the long-term decline in AngloGold’s share price persist – it is now worth 116,50 rand a share, just over a quarter of its record high in late 2011 – it is likely to face the axe in the December review, the first time the index will have been without a gold producer.

For a country that accounts for a third of all the gold ever mined, that is a significant milestone.

Some 130 years after gold was discovered on the Witwatersrand, the sun is setting on bullion mining as it becomes harder technically – and financially – to recover every ounce.

The most profitable reserves are long gone and the likes of AngloGold dig as deep as five kilometre for a metal that in three years has lost more than 35% in value, while mounting energy, labour and safety costs chip away at profits.

“It is probably the most unloved sector in the entire market,” said Chris Hart, an economist with Johannesburg-based Investment Solutions. – Nampa–Reuters