$4-million earmarked for downstream projects

28th February 2003 By: marisa rodrigues

South Africa’s largest gold producer, AngloGold, is likely to spend in the region of $4-million on its downstream projects and activities this financial year.

The company has established a solid beneficiation programme since its restructuring in 1998 in an attempt to find ways to add value to the ounces of gold it mines, transforming South Africa into a leader in the gold industry, and not just the gold-mining sector.

The jewellery industry has been an area where the company has placed much of its focus, as 80% of all the yellow metal is consumed by this market.

Healthy physical demand is important, no matter what the price is or what the market is doing, so as to avoid the gold market getting out of kilter and eventually correcting.

Despite South Africa being the largest producer of gold in the world, it is a minor producer in the jewellery industry, which is dominated by Italy and India.

AngloGold, through its various initiatives, is attempting to establish South Africa as an international competitor.

The company has a 25% stake in South Africa’s largest manufacturer of gold jewellery, OroAfrica.

This ultramodern, state-of-the-art factory in Cape Town produces more than six tons of gold jewellery each year, a large part of which is exported to the US.

AngloGold marketing director Kelvin Williams tells Mining Weekly that OroAfrica is working on strategic branding projects to further evolve its US business.

The US is a mass market that makes sense for the company, as South Africa enjoys tax relief into the US. It is also a market that is a large consumer of Italian chain and machine-made jewellery, which is what OroAfrica specialises in.

“The African brand developed by OroAfrica has been very successful in the US,” Williams comments.

Another brand OroAfrica is looking to develop is one for the youth market, a strategically important market that is not easily or naturally reached by gold producers.

The brand, which is to be launched in the next couple of months, is to be called ‘UU79 pure chemistry’, with the design innovative and modern, and the packaging unique.

Williams does, however, note that a brand can only be sustainable if it evolves continuously.

To do so, an incremental and ever-developing quality of design and fabrication needs to be achieved.

In a bid to achieve this sustainability, OroAfrica created a design centre in October last year.

The only one of its kind in South Africa, it has a computer-aided design facility, a full-time master designer and supporting staff, whose job it is to develop suites of new designs.

The Riches of Africa competition, initiated by AngloGold, has been running for four years now.

It has provided a platform to showcase the creativity and excellence of South African designs, with the competition’s first winner today a successful designer in the US.

“The competition has proved that South Africa can produce large, striking, stylish, well-made pieces, which have drawn much international interest,” remarks Williams.

“What we do focus on, though, is our ability to take these designer pieces and evolve commercial products from them.

“This does not mean shrinking the piece, but having the capacity to take the inspiration of the piece and produce a related piece that can be made by machine and is accessible to the consumer,” he continues.

The competition has attracted the interest of the youth, with most of the entrants coming from technikons.

To encourage young South Africans to produce designs that are not simply European, AngloGold organised a delegation of South African technikon lecturers and top students to visit Mali in 1999, so as to be exposed to the superb skills of Malian goldsmiths.

Following the visit, AngloGold has twice (in 2001 and 2002) sponsored master Malian goldsmiths to come to South Africa to transfer West African goldsmithing techniques to students and lecturers through hands-on training in workshops held in Pretoria, Johannesburg and Cape Town.

Other than to encourage different designs, the aim of these encounters has been to ensure that traditional African goldsmithing techniques are nurtured and preserved.

Goldsmiths in Mali and other West African countries work with simple, low-cost tools.

They are resourceful artists who produce sophisticated jewellery with limited outlay and serve to demonstrate to would-be jewellery designers in South Africa that they do not need significant capital for machinery and equipment to establish themselves.

Williams admits that a career in jewellery design in South Africa is not easily made. It would rather be in countries such as Italy and India, where new pieces have a great velocity to come through the system.

In another attempt to expose South African talent to the international community, AngloGold launched the Afridesia project last year, with three leading South African designers creating a range of fashion jewellery and accessories to complement their garments for a show during New York’s fashion week.

More than half of the gold jewellery items were manufactured by craftspeople in Johannesburg, with many items made with African gold-leafing and bead-working techniques.

“The jewellery had a positive response in New York and orders have been placed to sell some of the jewellery in the collection at top department stores in the city.

“Once again, the difficulty we are faced with now is that the collection is design-intensive and not machine-made.

“We have to establish how to go from a design piece to a mass-manufactured piece,” remarks Williams. In another beneficiation drive, AngloGold established the African Gold Zone in partnership with Rand Refinery and the Spatial Development Initiative programme of the Department of Trade and Industry (DTI) on Rand Refinery property in October 2000.

The project is to include a training facility for disadvantaged people who aspire to become jewellery manufacturers, while a jewellery hive will enable newly-skilled and talented goldsmiths to set up their own small entrepreneurial business ventures within a stable and semiformal structure.

However, Williams informs that the project is still under negotiation as there is a need for a bigger sense of commitment from government for it to continue.

“We think there is a significant disconnection between what we hear government saying what it would like to achieve for the local jewellery industry, and the incentives and support it allocates to realise these objectives,” comments Williams.

“While we are aware that there has been considerable assistance given to developing the jewellery industry in the Free State, the jewellery industry in Cape Town and Gauteng has not been granted similar aid, which is surprising, considering the jewellery industry is really based in these provinces,” he continues.

Outside of the jewellery industry, AngloGold is also involved in other initiatives.

It was the founder partner of Mintek’s in Project Autek, a programme to research and develop the use of gold in advanced industrial processes and devices as well as consumer applications.

The company is also building a gold e-business in partnership with Swiss gold refiner and bullion trader, PAMP MKS and US bank, JP Morgan Chase, focused on retailing gold jewellery and on bullion-trading.

The Gold of Africa Museum in Cape Town, which was opened by AngloGold in November 2001, housing a collection of more than 350 gold artefacts from West Africa, has reportedly drawn a uniformly positive response from visitors.

Williams indicates that AngloGold will continue to take an opportunistic approach to its downstream activities, ensuring at all times that such activities are good for gold and for AngloGold, and at the same time continue to be on the lookout for strategic interventions that will add value to its product.

“We would certainly like to look at some ethnic beneficiation programmes that would feed right into the tourist trade.

“We have seen what the Turkish gold jewellery industry did for the tourist trade in the 1980s and feel that this is an opportunity that is almost entirely untapped in South Africa,” concludes Williams.