EDITORIAL: Chris Griffith’s exit from Gold Fields a loss for mining sector

Did he jump or was he pushed? That was the question preoccupying the market on Tuesday after Chris Griffith resigned as CEO of Gold Fields. 

His resignation came after the failure of his “big transformational deal” to buy Canadian gold miner Yamana, a deal that would have turned Gold Fields into the world’s third-largest gold producer within the next couple of years.

Gold Fields’s all-share bid, worth $6.7bn (R121bn) when it was launched earlier in 2022, faced vocal opposition from some of its shareholders and those of Yamana. Griffith fought hard to get investors on board and the recovery in the share price after its initial crash suggests he made significant progress. But in the end, his efforts came to naught when a rival joint bid came in at the last minute from two Canadian miners, Agnico Eagle and Pan American. Though their $4.8bn bid was worth less than the initial value of the Gold Fields bid, it included a $1bn cash component — and the bidders could claim a Toronto postal address rather than one in Johannesburg. Yamana’s board rather bizarrely switched sides after backing Gold Fields. And Gold Fields’s own board decided not to make a .

Though Gold Fields earned a $300m break fee from Yamana as a result of being stood up at the altar, as it were, it was surely little comfort to Griffith. He had argued very strongly that the company needed to lock in longer-term growth options sooner rather than later in a world in which good assets in good jurisdictions were becoming ever more difficult and costly to find. Over the next three to four years Gold Fields will be bringing its Chilean mine Salares Norte online and ramping up production from its giant SA mine, South Deep. But it has no significant internal growth options beyond that: it has to go out and buy growth assets, which is what Yamana would have supplied, along with some lucrative mines in good jurisdictions, particularly Canada.

Gold Fields chair Yunus Suleman was insistent on Tuesday that Griffith had approached the board — he wasn’t pushed. Rather, said Suleman, Griffith felt he should take responsibility personally for the failure of the Yamana deal. The chair was insistent too that the board and Griffith were totally at one on the merits of the deal — and that the decision not to counter-offer was unanimous. That of course raises the question of why the board itself doesn’t feel the need to take responsibility for the failure of the deal. It has also raised questions about whether the decision to walk away was as unanimous as Suleman indicated. Much of the opposition from investors was about the premium Gold Fields wanted to pay, which was seen as too high. But an independent valuation put the value of the Yamana assets at up to $8bn. And it’s not too hard to imagine that Griffith might have fought quite hard to push the board to be brave and up its bid.

In the event, he has walked away after less than two years in the job. He joined Gold Fields after an extremely successful career at the helm of SA’s largest iron-ore producer, Kumba, and then the world’s largest platinum group metals producer, Anglo American Platinum. He had big ambitions for Gold Fields too. It cannot be much of a surprise to the market that the thwarting of those ambitions, whether by rival Canadians or by investors or by his own board, prompted his departure.

It is a big loss for Gold Fields, especially given that three other executives announced their departure earlier. It will create significant uncertainty about the company’s operating and strategic trajectory, despite Suleman’s efforts to provide reassurance on Tuesday. But Griffith’s departure is a big loss too for SA’s mining industry. As the Yamana bid demonstrated, he has big ambitions and they are global ones. What he will do next is unclear. We can but hope he will not be lost to SA.