Barrick Gold ends Africa mine sale plan to Chinese firm

A worker holds a gold bar in a shop in China China's economic growth has resulted in an increased demand for gold in the country

Related Stories

Barrick Gold has ended talks to sell a controlling stake of its African business to China's state-owned miner, China National Gold Group.

The firms failed to agree on a value for a 74% stake in African Barrick Gold, Tanzania's largest gold miner.

The $3bn (£1.9bn; 2.3bn euros) deal would have been the largest gold firm takeover involving a Chinese company.

Barrick is the world's largest gold producer with output of 7.7 million ounces in 2011.

Shares in African Barrick Gold (ABG) slumped 19% to 352 pence by the close of trading in London.

"These discussions were part of our ongoing efforts to identify opportunities to optimise our portfolio," Barrick's Chief Executive Jamie Sokalsky said in a statement.

He added that the company will continue to look for opportunities that "generate acceptable value for Barrick".

Holy Grail?

ABG said it would review its business operations after the collapse of the deal.

The company has struggled to meet production targets in recent years due to rising costs and operational setbacks, and in October it cut 2012 production forecasts.

ABG's mines have faced a series of problems in recent years. In 2011, police killed seven people after a crowd of 800 raided one of the company's mines for gold.

At the same time it failed to hit planned production levels at two other mines.

Analysts say the deal floundered after China National Gold's "due diligence" process into production shortfalls at Barrick's operations.

"Over the last 12 months there has consistently been a decline in gold production at their mines, and they've had to do extra work to seek out higher quality ore, which costs money," David Lennox, resource analyst for Fat Prophets, told the BBC.

Mr Lennox added that the collapse of the deal may show that Chinese firms are becoming less keen on investing in Africa.

"They're discovering that Africa is not the Holy Grail," he said.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features & Analysis

Elsewhere on the BBC

  • StuntmanStuntman to the stars

    Driving dangerously and falling off buildings are all part of the day job for Bobby Holland Hanton

Programmes

  • A digger operated via an Oculus Rift and a controllerClick Watch

    Why controlling a heavy digger with a virtual reality helmet might improve safety

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.