Gold Fields has rejoined the World Gold Council (WGC), the market development organisation for the gold industry, after a long wait of eight years, having cited fees or dues charged by the Council as reason for the exit, at a time when gold prices plummeted.
Taking a relook at its decision, and considering what the future holds for the gold market, the Ghana and South Africa mining giant has agreed to join its peers to take valuable market decisions and not to remain on the peripherals any longer.
In 2014, when the decision was made to exit the organization, members paid per ounce of metal produced to the council. What broke the camel’s back for Gold Fields was that, after considering the cost-benefits of staying in the organization amid the company’s efforts to adjust to a gold price that had dropped by 21% since 2013, it concluded, staying was not sustainable, thus the exit.
Meanwhile, Gold Fields did not exit alone, as its South African peer, AngloGold Ashanti followed, also citing same reasons for their exit, including a medium-sized Canadian miner IAMGOLD.
Chris Griffith, Chief Executive Officer of Gold Fields commented:
“I am pleased that we are re-joining the WGC. The future outlook for gold is exciting and the WGC has an important role to play in helping to further develop access to and confidence in gold. Working alongside peers who are also committed to responsible and sustainable gold mining, we can collectively demonstrate the significant role that gold plays in supporting societies’ needs.”Chris Griffith, CEO, Gold Fields
In 2015, the World Gold Council (WGC) member company Newcrest Mining, headquartered in Australia also ceased to be a member of the WGC, thereby reducing the Council’s membership from 19 to 18 gold mining companies.
Members’ Exit A Blow to WGC Finances
These series of gold miner departure directly impacted the World Gold Council’s annual funding because members’ dues constitute an important component of the Council’s total revenue.
The foregone member dues contributions from Gold Fields, AngloGold Ashanti and IAMGOLD after their departure was estimated to be about $9 million at $1 per gold ounce members’ dues contribution, or $18 million at $2 per gold ounce contribution.
The World Gold Council’s annual revenue consists primarily of ‘Member Dues’ and ‘Sponsor Fees‘. A third income line item, ‘Other Income’, provides a very marginal contribution to the Council’s revenue.
Also, the departures left Barrick, Newmont, Goldcorp and Kinross as the four largest gold miner members in a World Gold Council largely dominated by North American, and especially Canadian, gold mining companies.
The WGC’s 18 members that remained were: Barrick, Newmont, Goldcorp, Kinross, Agnico Eagle, Buenaventura, Yamana, Eldorado, Alamos, China Gold, Golden Star Resources, Primero, Franco Nevada, Acacia, Royal Gold, Silver Wheaton, Newgold, Centerra.
In a press statement that highlights the acceptance of the Council to Gold Fields’ decision to rejoin, Randy Smallwood, Chair of the WGC, commented:
“We are pleased to welcome Gold Fields back as a member of the WGC. Leveraging the experience and expertise of fellow member companies such as Gold Fields, provides the WGC with opportunities to further advance its work and mission to stimulate and sustain the demand for gold, while also promoting the social and economic benefits of gold mining.”Randy Smallwood, Chair of the WGC
Headquartered in Johannesburg, South Africa, Gold Fields was among the founding members of the WGC in 1987 and played an important role in shaping the direction of the WGC and was involved in many of the initiatives that have supported the development of the global gold market.
Gold Fields is a globally diverse gold producer, with nine operating mines in Australia, Peru, South Africa and Ghana, as well as one project in Chile and is listed on both the Johannesburg and New York stock exchanges.