AngloGold Ashanti bridges the gap

It’s exactly seven years when the biggest corporate merger between former Ashanti Goldfields of Ghana and the ex- AngloGold of South Africa took place simultaneously in Accra and Johannesburg, Ekow Essabra-Mensah, our Chief Correspondent looks at the economic impact of the merger in the country’s development so far.

AngloGold Ashanti’s (AGA) production performance for the past six years may not be one of the best since the historic merger between the former Ashanti Goldfields and the former AngloGold of South Africa.

Production has been below at 400,000 ounces at Obuasi and costs relatively high compared with its peers, but it s current managers say the problems undermining the old mine is been fixed. It has lost its prestigious position as both costs and production leader, and it is no longer the big elephant the locals called the company in the past.

However, the role of the company in the local and national economy is still respected. The NGOs have been accusing the company of environmental neglect and alleged human right abuses; but for the people in the Obuasi municipality and the surrounding communities, it is business as usual. “We need AGA and the company also needs us, so we have to work together”, Daniel Adisah, a spare parts supplies to the Obuasi mine said.

The banks - Standard Chartered Bank, Agriculture Development Bank, Ghana Commercial Bank, Barclays – are first to acknowledge that they are making brisk business, taking larger volumes of deposits and savings whiles the market women, shopkeepers are also profitably busy with their merchandise, thanks to the mining company.

Created as a result of the combination of assets of the former Ashanti Goldfields of Ghana and the ex- AngloGold of South Africa in April 2004, AGA was seven years old last May, and questions been asked by keen watchers of the mining sector is what significant impact has the merger made on the fortunes of the communities and the people of Ghana.

For freshers who have not been following the mining industry with keen industry, the merger was the biggest corporate event to take place in Ghana in 2004 and it took place simultaneously in Accra and Johannesburg in April/May 2004. In terms of the scheme of arrangement, which consummated the merger, the Ghana Government received 29 AngloGold Ashanti shares for every 100 Ashanti shares, and at the share price of $33, the value of the government stake was valued at $210 million.

In addition, AngloGold Ashanti paid about $98 million to the Government, in respect of the Stability Agreement as follows: 2.6 million AGA shares, valued then at $88 million; $5million Cash and $5 million as advisory fee on behalf of the Government and “given the hosts of risks associated with mining, these payments were genuinely made to secure the comfort and stability of the Company’s current and future investments”’, a mining researcher in Accra explained.

If the Ghana Stock Exchange credits itself as one of the biggest stock markets in Africa, whatever angle one looks at it, AGA certainly takes part of the credit as the exchange is growing at its back. It is one of the renowned multinational companies to be listed on the exchange with an average weight of 65% of the entire market capitalisation of the exchange. It has been on the exchange since 1994.

Its presence on the exchange also has given Ghanaians the opportunity to buy into the company to share in its success and challenges. The government is the seventh biggest shareholder of the company, with 11.2 million of the Company’s total ordinary shares of 362 million, representing approximately 3 % stake.

In addition to the Government, there are 117 Ghanaian ordinary shareholders and about 25, 000 Ghana Depository holders. The government made $221 million from the company when it sold part of its interest in AGA last February to support national development.

The company, for the past years, has repatriated substantial part of its earnings back to the country and has even injected more than US $800 million to support capital and stay - in - business in the two operations in the country.

Admittedly, with unemployment higher in the country, when it comes to provision of jobs, AGA is a leader of job creation as it employs more than 63,000 people worldwide, of which 9000 of them are Ghanaians. This includes its employees at Iduapriem, Obuasi, Accra Corporate Offices and Tema/Takoradi. This makes it the biggest employer in the mining industry, before and post merger.

“We had labour losses in the form of retrenchments and attrition, but we are currently employing directly about 9000 Ghanaians, including contractors working directly for the company. Comparatively, this is more than half of the industry’s direct employees. Indirectly we employ more than 54,000 people,” Mr. John Owusu, General Manager Public Affairs, AGA, told B&FT in an interview in Accra.

Production is certainly low and costs are on the high side, compared with the Goldfields and the Newmonts, AGA continues to pay more dividends and other form of legal exertions since 2004. Mr. Owusu noted that in terms of payments to the government as a regulator and shareholder of the company, since 2004, it has paid over $290 million in direct and indirect taxes as at December 2010. This is made up of royalties, customs duties, dividends, payroll and property taxes.

Social Investments

On the company’s social investments, Mr. Owusu said: “Our job at Obuasi and Iduapriem, like other AGA operations elsewhere, is to explore and mine gold for export. We are also working hand in hand with our business and social partners to move the entire communities around our operations forward in the spirit of our values. We uphold and promote fundamental human rights. We will contribute to building productive, respectful and mutually beneficial partnerships in the communities. We aim to leave the host communities with a sustainable future.”

According to the Public Affairs Manager, to sharpen the skills and experiences of its employees, AGA has carefully selected local and international institutions of higher learning for training and development of its employees and as at the end of 2010, some $9 million had been spent on Ghanaians alones. The employees who have benefitted so far were sent to GIMPA and University of Cape Town Business School.

There are also scores of university and polytechnic graduates, who are undergoing free training in engineering, metallurgy, finance and management, under the Company’s apprenticeship scheme at Iduapriem and Obuasi mines, most of whom were selected from the host communities.”

AGA has built and donated more than 14 schools in the Iduapriem and Obuasi communities, and we were the first to build a hostel for the Komfo Anokye Medical School in Kumasi, which have benefitted hundreds of students, most of whom are medical officers and specialists.

Remote communities, such as Wangarakrom, Adieyie and Abunponiso in the Tarkwa Nsuem area have for the first time schools with teachers partly paid by the mine. The fact is that some of the products of these schools are graduates working as miners, teachers, nurses, civil servants and business people.

At the University of Ghana, AGA has sponsored the Kwame Nkrumah Chair with $400,000 to promote the study and research of contribution of Africa to world civilisation. As part of the chair, the Institute of Africa Studies organises Business lectures on Africa with the company annually.

Possible the company biggest achievement in the health sector is the malaria control programme, which h as ben acclaimed locally and international as a “successful project”. The $3million malaria control programme, dubbed “Obuasi Malaria Control Programme” in 2006 was inaugurated by the former President of Ghana. The objective at that time was to reduce the incidence of malaria by 50% in two years.

Working in partnership with the government, Obuasi municipal assembly and other institutions malaria cases in the Obuasi municipality has reduced by 75%, according to Steve Knowles, Director of the AngloGold Ashanti Malaria Company. Similar malaria project was carried out at Iduapriem communities last year and the results were outstanding.

This has spared thousands of women and children, who would have become victims of the deadly infection. Absenteeism among employees, traders and schoolchildren have significantly reduced impacting positively on the hospital beds in the municipality, Knowles observed.

AngloGold Ashanti has so far solely funded the project with $8.4 million, and in recognition of this success, the the Swiss - based Global Fund has agreed to fund with $133million in 5years, the upscale of the Obuasi project in 40 districts in the country, most of which are located in the three northern regions. Besides the thousands of new jobs, which will be open in these districts, literally thousands of lives will be saved from malaria infection.

AGA health stride does not end with malaria control. In the same vein, working in partnership with the Ministry of Health, AGA has put up the Obuasi Arthur Cade Hospital, which is one of the biggest medical facilities in Adansi districts, as part of the Government’s National Insurance Scheme. Besides the numerous referral cases sent from the mostly ill-equipped private hospitals, operating in the districts, this has created a rare access to thousands of people in the communities, who otherwise lack access to modern medical care.

The Quarterly medical outreach programme launched by the Iduapriem mine in Tarkwa Nsuem Municipal Assembly for the people in its communities, has also saved hundreds of active lives. The outreach drive, besides free medical screening, some token of drugs are given to the people.

At the national level, AngloGold Ashanti was the first to contribute a seed funding of $100,000 for the construction of a neuroscience clinic at Korle-Bu Hospital in Accra, which will be the biggest of its kind in West Africa, after construction.The government hospitals in Obuasi, Bibiani and Tarkwa have all benefitted from substantial donations from the company, which in all way sustained access to modern medical services to the people.

AngloGold Ashanti, as part of its social development has committed itself to sponsor the construction of 20 multi-purpose sports facilities in all the ten regions of the country.

Working in conjunction with the Ministry of Sports and the National Sports Council, the Company is providing $2 million funding.The expectation is that the projects will go a long way, when completed, to uplift sports development in the less - endowed districts in the country. The company owns the Len Clay Sports Stadium and continues to sponsor the Obuasi - based Ashanti Gold Football Club at a fortune.