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A Vision of the Future of Gold

Fourth International Gold Symposium Lima, Peru

The AngloGold View


presented by Roberto Carvalho Silva Executive Officer South America

May 2000

Overview
AngloGold belief in gold Inheritance & the social role of gold Actual market The role of producers for the future of gold Taxation

Overview
Business for professionals New uses Gold: a jewel for everyone Gold: a jewel for every occasion Making the golden difference

In late 1999 AngloGold acquired Australian Acacia Resources

AngloGold belief in gold


Worlds largest producer: ca. 7.5 million ounces per year Operations in 4 continents

AngloGold belief in gold


(cont.)

Ready for the future: reserves of 107 million and resources of 365 million ounces Leading market development programme Major supporter of the WGC - World Gold Council

AngloGold Market Development Program


(cont.)

Sponsorship of gold jewellery design competitions in various countries Co-sponsor of Gold Virtuosi, the global gold design contest Dialogue with governments and banks in China for domestic market de-regulation

AngloGold Market Development Program


(cont.)

US$ 15 million invested in program during 1999 Budget for 2000: US$ 16 million Research to identify opportunities & positioning gold for new generation Avenues to offer gold for branded end of the market & value-for-money consumers

Inheritance & the social role of gold


Gold a millenary symbol of value Gold in modern society
Bretton Woods system is history gold is an option competing among other consumer goods

Inheritance & the social role of gold


(cont.)

Mining an industry for the progress of modern world


new technologies: safe & environmental friendly creating jobs, bringing economic development & wealth creating value for global investors in global economy

Actual Market
Supply & demand Mining vs. Fabrication

World Gold Supply


5000 4000 Tonnes 3000 2000 1000 0 Mine production Official sector sales Old gold scrap Net producer hedging Toal Supply 1998 2542 375 1092 88 4097 1999E 2569 441 624 445 4078

Source: Gold Fields Mineral Services Gold Survey 1999 - Update 2

World Gold Demand


5000 4000 Tonnes 3000 2000 1000 0 1998 Jewellery Other fabrication Bar hoarding Implied net investment Total demand 3157 568 113 260 4097 1999E 3069 603 203 203 4078

Source: Gold Fields Mineral Services Gold Survey 1999 - Update 2

Location of Top 20 Gold Producers


600

Tonnes

400 200 Africa 1998 1999E 588 574

North America 530 515

Oceania 373 372

Asia 334 340

Latin America 259 297

Europe 230 241

Top 20 producers represent about 90% of total world production


Source: Gold Fields Mineral Services Gold Survey 1999 - Update 2

Gold Fabrication throughout the Globe (1999 E)


1.000 800

Tonnes

600 400 200 Europe North Latin Middle America America East 380 205 113 104 608 572 Indian Sub 740 702 East Asia 683 511 Africa 45 36 Austral China asia 21 6 186 171 CIS 45 29

Gold Fabrication Jewellwery Fabrication

852 734

Source: Gold Fields Mineral Services Gold Survey 1999 - Update 2

Mining vs. Fabrication


Fabrication adds value to product
major mining countries are minor fabricators fabrication takes place in areas with higher consumption fabricating countries export to other high consuming areas fabricating countries export to supply demand in mining countries

Mining vs. Fabrication

(cont.)

Develop fabrication in mining countries increase demand in these areas & in global terms new jobs & opportunities in industry and retail opportunity to export fabricated items as well as bullion global competition

The role of producers & institutes


We have to look after our market Taxation Business for professionals New uses

The role of producers & institutes


(cont.)

We have to look after our market


Future is in our hands Change from pure investment to good Gold competes with other products: we can not wait for gold to find its own way

The role of producers & institutes


We have to look after our market
(cont.)

Consumers have limited resources why gold is fancier than fashion wear, electronics, cars & travel? Strategic alliance: wear, electronics, cars, furniture... fancier and better with gold

The role of producers & institutes


Taxation
High taxation in many country limits access to gold Develop studies showing potential additional economic activity generated in commerce, industry and mining Pressure governments to review and reduce taxes throughout the chain

The role of producers & institutes


Sales Tax/VAT on Gold Jewellery Around the Globe
COUNTRY TAX COMMENTS European Community 15%-25% VAT varies depending on country United States 0% - 8.25% Sales tax varies according to state Japan 5% China 17% Plus 5% additional "consumption tax" India 1% Singapore 3% Hong Kong None Thailand 7% Taiwan 5% Dubai None

The role of producers & institutes


Sales Tax/VAT on Gold Jewellery Latin America
COUNTRY Argentina Brazil Chile Colombia Mexico Panama Peru Uruguay TAX COMMENTS 21% Plus 20% excise tax on gold jewelry 51% Various cumulative state & federal taxes 18% Plus 50% luxury tax on gold jewelry 15% 15% None 18% 21%

The role of producers & institutes


Taxation
(cont.)

Lower taxes in consuming countries Lower taxes in fabricating countries Higher taxes in mining countries Campaigns to show governments the benefits of reducing taxes to international benchmark levels

The role of producers & institutes


Taxation
(cont.)

Lower taxes reduce informality Lower taxes, higher income from taxes Develop local industry More jobs in industry More opportunities in retail Additional export revenue

The role of producers & institutes


Taxation
(cont.)

Effects from high taxation in Latin America Miners export bullion Local industry has to import raw material Local retailers import finished goods

The role of producers & institutes


Taxation, Mine Production & Fabrication
COUNTRY European Community United States India Argentina Brazil Chile Peru TAX Mining Fabrication 15%-25% 131 (*) 852(**) 0% - 8.25% 354 380 1% Not a Top 20 740 21% 34 Latin America 51% 54 (with Mexico) 18% 44 total fabrication 18% 121 113

(*) Russia production: the only European country part of Top 20 producers is not an EU member (**) Gold fabricated over all European continent.

The role of producers & institutes


Business for professionals
Giant high technology mining companies vs. low productivity/ labour intense final product manufacturers Assist on modernisation of final product manufacturers technology Provide access of final product manufacturers to credit

The role of producers & institutes


New uses
Invest in research for design with development of new uses and combination with new materials (e.g. sporting goods and furniture) Marketing: develop marketing structures to attract retailers and final users Distribution chain: develop distribution chains- consultants for handling and storing

Gold: a jewel for everyone


High end jewellery for high end users characterised by exquisite design Giving a glance to casual look and look fashion: in the office, at the market, in the mall, in the gym People like us have to have a shining identity.

Gold: a jewel for everyone


(cont.)

Gold is popular: not in your dreams, but on your skin. Everyone deserves to shine: good looking popular jewellery . Fashion jewellery containing the real thing. Distribution channels: low gold content products shining at boutiques, department stores, markets and drugstores.

Making the golden difference


AngloGold: a proactive market participant seeking to protect & increase the use of our own product

Making the golden difference


(cont.)

AngloGold is taking market development initiatives:


marketing team with exclusive focus on market development Gold Avenue web site distributing gold products through the Internet making gold accessible to millions throughout the globe new potential customers JV with JP Morgan & Pamp

Making the golden difference


(cont.)

AngloGold is taking market development initiatives:


programmes to integrate & develop gold players: producers, designers fabricators, distributors & retailers access the taxation issue to reduce rates at mining countries to consuming country levels

Making the golden difference


(cont.)

AngloGold market development initiatives can not be isolated Miners and other chain members have to realise the importance of sticking together and making the difference

Making the golden difference

The future of gold is in our hands