The principal risk in building a company in Africa lies not in the continent’s socio-political conditions, but in the need to put together a business model and a management team capable of dealing effectively with the dynamics of an emerging market.
So said Mark Bristow, chief executive of Randgold Resources, at the recent Mining Indaba in Cape Town. Randgold is a gold mining and exploration company with operations in African countries such as Senegal, Mali, Côte d’Ivoire and the Democratic Republic of Congo.
“The first step in doing that is to recognise that the big global corporation approach with its sophisticated systems and risk analysis is simply not appropriate to this environment,” said Bristow.
“For a business to operate successfully in Africa, it should be focused on the pursuit of real value; performance-based and sustainable growth; and the fostering of productive people and mutually beneficial relationships,” he added.
“From day one, it’s been our creed that you only create real value in the gold mining industry when you discover and develop your own world-class deposits, instead of paying premium upon premium to get more ounces through mergers and acquisition transactions. It’s all about discovery. Everything else – mining, processing, production – are merely links in the chain that transforms gold in the ground to money in the bank to benefit all stakeholders,” he said.
“What is the ultimate aim of any business? To be big? Or, to create value? The answer should be obvious, yet if you look at the structures and returns of many of the major gold companies, it’s all too clear that they would be more profitable if they were smaller and more focused.”