JOHANNESBURG (miningweekly.com) – While global gold miners will gradually shift their focus from financial austerity to growth through acquisitions and increased spending, miners operating in sub-Saharan Africa will face elevated costs owing to regulatory uncertainty, power shortages and labour unrest, according to Fitch-affiliated research firm BMI.

The firm cited Tanzania-focused miner Acacia Mining’s battle with the local government, noting that it had announced plans in September to reduce operations at the Bulyanhulu gold mine, following unsuccessful negotiations over the government's decision to ban gold and copper ore exports.

The export ban would continue to weigh on parent company Barrick Gold, lowering cash flow and resulting in lower year-on-year gold production in the third quarter.

In South Africa, in the first half of the year, Gold Fields' all-in sustaining costs (AISC) averaged among the highest of senior gold peers, at $975/oz, while top miner Barrick Gold remained an industry leader in cost competitiveness, posting an AISC of $710/oz in the second quarter, compared to an average of $884/oz among global senior gold miners.

BMI noted that senior gold miners would now prioritise risk mitigation, in terms of political and financial risk, resulting in project development in developed markets and joint-venture partnerships among top firms.

“Lower recovery in gold prices, compared to the spike in base metal prices, will result in a gradual recovery for gold miners. For instance, in the third quarter, profit margins among top gold miners averaged 0.8% compared to an average of 8.2% for top diversified miners,” BMI highlighted.

The firm pointed out that Chinese firms in particular would continue to target gold assets abroad, with the Asia Pacific region more than doubling gold mining merger and acquisition activity to $7.2-billion in 2016.

In terms of market share, BMI believes that the global gold industry will remain fragmented, with a number of active junior miners and exploration firms.

Barrick Gold, Newmont Mining, AngloGold Ashanti and Goldcorp will remain the largest gold producers, accounting for nearly one-fifth of global output.

Looking ahead, BMI pointed out that miners would remain focused on lower operating costs to improve competitiveness and to better withstand long-term price volatility.