By [bn:PRSN=1] Ron Derby [] Feb. 17 (Bloomberg) -- AngloGold Ashanti Ltd., Africa’s largest producer of the precious metal, plans to cut costs in South Africa by 10 percent this year amid rising labor costs and power prices that may more than double by 2012. “We have to find ways and means of getting our cost structures down,” Chief Executive Officer Mark Cutifani said on a conference call today. The Johannesburg-based company plans to cut costs by another 15 percent between 2011 and 2014, he said. South African gold producers are trying to boost output to benefit from a rally in the price of the metal, which climbed 24 percent last year. At the same time they are facing higher labor and power costs, with state utility Eskom Holdings Ltd. applying to raise tariffs 35 percent a year for the next three years. Robbie Lazare, former executive vice president of human resources, is leading a team that aims to boost output and cut costs by reducing safety-related stoppages, Cutifani said. Safety stoppages cost AngloGold 160,000 ounces of lost production last year, Richard Duffy, vice president of the company’s African division, said in Johannesburg today. After an increase in mine fatalities in 2007, South Africa introduced a policy of stopping activities at mines following deaths until it is satisfied conditions are safe. While there are no immediate plans for job cuts, AngloGold “can’t guarantee that won’t be the case in the future,” Cutifani said, without giving further details. The company employs about 32,500 people in South Africa. Cost Per Ounce Southern African output, which includes Namibia, fell 7.2 percent to 448,000 ounces in the three months through December, while the cost per ounce mined climbed 9.5 percent to $575, AngloGold said in a stock exchange statement today. AngloGold fell 2.60 rand, or 0.9 percent, to 295 rand in Johannesburg, valuing the company at 106.8 billion rand ($14.1 billion). The stock has fallen 7.8 percent during the past 12 months, as smaller competitors Gold Fields Ltd. and Harmony Gold Mining Co. Ltd. declined 21 percent and 41 percent respectively. Gold advanced for a ninth year in 2009, as near-zero interest rates in the U.S. weighed on the dollar. Immediate- delivery gold’s climb in 2009 was less than the rand’s 28 percent gain against the dollar. AngloGold, Gold Fields and Harmony sell the metal for dollars and pay wages and other costs mostly in the South African currency. AngloGold in July agreed to increase miners’ pay in South Africa at least 9 percent. South Africa’s inflation rate was 6.3 percent in December. To contact the reporter on this story: Ron Derby in Johannesburg at rderby1@bloomberg.net

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