The Globe and Mail - June 13, 2011

By Michael Taylor/Reuters

The opinion expressed in this article does not necessarily reflect the opinion of TVIPacific. It is meant for information purposes only for our readers. This is thepersonal opinion of the author only. 

The gold producer says prices will go up this year and before rising further in 2012 because of growing demand from Asia

JAKARTA — Newmont Mining Corp, the world’s no. 2 gold producer, sees prices for the precious metal rising up to $1,600 (U.S.) this year and then above that next year, on growing demand from Asia’s burgeoning middle class.

Chief Executive Officer Richard O’Brien also said on Monday that the planned initial public offering (IPO) of the company’s Indonesian unit might be delayed to the middleof next year.

“Next year wecould maybe get over $1,600 for a while,” O’Brien told Reuters in an interviewon the sidelines of a World Economic Forum Event in Jakarta on Monday.

“Longer term, it’s still potential upside, depending on U.S. dollar weakness, and a sustained building of the middle class in both India and China,” he added.

India and China, the world’s top two gold consumers, together consumed about 1,543 tonnes of gold jewellery, coins and bars in 2010, the World Gold Council says.

Spot gold traded at $1,530.59 an ounce on Monday, near a record-high hit in early May of $1,575.79.

A Reuters poll of analysts in April showed expectations of prices reaching an average of $1,700 an ounce in 2015.

China and India are also major consumers of copper. O’Brien said that unless something happensto the two buyers, copper will be in “a pretty good trading range for the nextseveral years”.

“$4 to $4.5 range(per pound) is a reasonable place for us to be for the next two years,” he said.

Newmont runs the Batu Hijau gold and copper mine in Indonesia’s West Nusa Tenggara through its unit PT Newmont Nusa Tenggara. Last month, Newmont Nusa Tenggara’s chief executive Martiono Hadianto said the company planned to launch an IPO in the second half of this year.

However, O’Brien said the IPO might be delayed to mid-2012, as the company is waiting for theclosure of an expected divestment of a 7 per cent stake required under its mining contract.

Indonesia’s parliament has clashed with the finance minister in recent weeks over the validity of the central government deal to buy the stake.

“Probably midnext year really is more realistic,” O’Brien said.

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