Why 2025 is a window of possibility for JSE’s gold miners
SOUTH African gold producer margins are at record levels, which is normally the cue for a commensurate margin-damaging increase in unit costs. But perhaps not this time, argues RMB Morgan Stanley.The bank picks out three reasons why cost pressures arising from gold’s gravity-defying ascent won’t immediately catch up with the JSE’s three largest gold producers: AngloGold Ashanti, Gold Fields and Harmony Gold — at least, not this year.First, both total capex and exploration intensity among the big three have already risen by more than 80% in the past four years compared with the average between 2014 and 2020. While underlying mining inflation is still running at mid-single digits in US dollar terms, a lot of the cost inflation is now “in the base”; the likelihood of more is considered to be low.Second, there’s also low expectation of new major capital expansion announcements from the three miners this year. Gold Fields’s escalation of its (delayed) Salares Norte project in Chile, AngloGold’s ramp-up of Obuasi mine in Ghana and the integration of Centamin — which AngloGold acquired last year — will result in a drop in all-in sustaining costs (AISC). Harmony has already provided AISC guidance of 13%-22% higher in rand terms.But, third, it’s the price of gold that is directing matters, largely driven by US President Donald Trump’s tariff and trade war announcements.Apart from entrenching gold’s place as a safe haven investment, the geopolitical uncertainty is also contributing towards hesitancy among investors, freeing space in portfolios to add gold, says UBS precious metals analyst Joni Teves.On February 17 the bank upgraded its outlook on gold. “We think it is possible to see a high to $3,200 an ounce before prices gradually ease and stabilise at elevated levels over the next few years,” Teves said.Central bank support has given a further boost to gold. After pausing in November, gold pushed on in December, owing, analysts say, to a build in stocks on the Comex market. Then, in January, the World Gold Council said central bank purchases had broken through 1,000t in 2024 for the third year in a row. Banks accelerated purchases sharply in the fourth quarter to 333t, it said.In a report on February 14, Morgan Stanley said: “Given its role in decoupling gold from its usual drivers since 2022, the pace of central bank gold buying seems critical to the outlook.” It asked: “Gold unstoppable?”, adding: “With many of gold’s supportive drivers still in place, on balance we think we haven’t yet peaked.”A version of this story first appeared in the Financial Mail.The post Why 2025 is a window of riches for SA’s gold miners appeared first on Miningmx.Weiter zum vollständigen Artikel bei Mining.com
Quelle: Mining.com
