JEDDAH, 25 June 2007 — AngloGold Ashanti Limited, the world’s No. 2 gold producer, is exploring Saudi Arabia’s market — the major gold consumer in the Middle East — to boost its gold exports.
The World Gold Council (WGC) said in a recent report that Saudi consumer demand for gold in the first quarter of 2007 increased seven percent from the same period last year, with jewelry up seven percent and net retail investment up by three percent. Total gold demand in Saudi Arabia in the first quarter of this year reached 25.9 tons.
Thero Setiloane, executive officer — marketing of AngloGold, who visited Saudi Arabia to get first-hand information on the gold market, said: “There is a tremendous capacity for growth in the gold market as per capita consumption of gold in the Kingdom is one of the highest in the world. The per capita gold consumption in Saudi Arabia is about 5 to 7 grams, which is much more than in some other countries.”
He said they had held discussions with industry leaders, with jewelers here and they believe there was a lot in common. “We have seen interest in improving the quality of the manufacturing side and also consumer experience when they are buying the gold,” Setiloane said.
“We are looking at the demand side of our business in the Kingdom for gold jewelry, gold investment products and gold bars,” he said. “We spend some time with L’azurdi which is a partner of the World Gold Council in a project. We also visited the National Commercial Bank (NCB) office, gold importers in Saudi Arabia to explore more avenues to boost gold exports into the Kingdom,” he added.
“We are trying to boost our gold exports to the Kingdom as there is a pickup in religious tourism which is open throughout the year,” Setiloane added.
Rian Raghavjee of marketing department of AngloGold, noted that “Nowadays consumers are becoming brand conscious so the gold industry needs to modernize to meet the expectations of the consumer.” He said “three objectives are applicable throughout the world in gold projects which are: The creation of brands within gold jewelry, design quality of the product to make gold products fashionable and trendy and marketing.”
Highlighting the important aspect of marketing, Raghavjee emphasized: “How many retailers spend money on gold advertisement? If you pick up any magazine, you will find ads about perfume, cell phones, watches and so on. But what about gold?”
He said there were two types of consumers in the gold market in the Middle East and India. One is the traditional consumer who buys for traditional ritual use such as weddings, and the other is the modern consumer who buys for fashion and style.
He said industrial application for gold grew 9 percent last year. There are four take-off sectors, which WGC focuses on in terms of promoting demand for gold. Jewelry takes the major chunk of demand of about 70 to 75 percent, followed by investment coins and bars. Then the official sector — central banks that buy and sell gold, and the industrial sector.
Setiloane, who is currently chairman of the Rand Refinery and is also a member of the executive committee of the WGC, said they were teaming up with industrial companies around the world and looking at research for other uses of gold in order to spread demand for the precious metal.
He added: “India is a very important market for the gold sector. It is the largest single gold consuming country. We are trying to modernize the industry in India in terms of design, branding and quality.”
Bisher A. Diab, consultant (Gulf region) of WGC, said: “There was a fall in demand for gold all over the world last year because of price volatility. Fluctuation in prices just keeps the consumer unhappy and it discourages consumers which is not good for the industry.”
Diab said: “The demand for gold in Saudi Arabia in 2006 was 122.4 tons and in the first quarter of this year there is already an increase of seven percent,” adding that in the second quarter we expect the demand to exceed 10 percent.
On the London Bullion Market, the price of gold was trading on Friday at $653 per ounce.
AngloGold, which has 13 operations globally and produces about 5.7 million ounces of gold annually, reported adjusted headline earnings of $97 million for the first quarter of 2007, nearly double that of the previous quarter, due to an improved price received and the absence of accounting adjustments that negatively affected earnings in the fourth quarter of 2006.
AngloGold Ashanti is committed to continuously improving the performance of current assets through cost management and increased labor productivity, as well as by seeking out value-adding growth opportunities through exploration and a disciplined acquisition strategy.
AngloGold, which also has the biggest gold refinery in the world, is headquartered in South Africa and listed in South Africa, Australia and New York, with shares trading at around $42 lately.