Anglogold Ashanti Limited, Africa’s biggest gold producer and third in the world, says it will not scale-back planned investments at its Obuasi mine despite the wave of industry tax-changes that kick-off this year.
The company says it expects to invest at least US$150million for a second year in the Obuasi operation, its biggest in the country, which in recent years has suffered from higher costs and a decline in output.
Meanwhile, Gold Fields, the world’s fourth-largest gold producer, has said that planned investments of US$1 billion at two of its mines in Ghana were in danger of being cancelled over changes to taxes.
Profit taxes in the industry have been hiked to 35 percent in addition to a windfall tax of 10 percent, in a move the government says will partially equalise the benefits of mining between the country and companies.
Gold prices have reached new records in recent years, but the country has not benefitted enough from the windfall, Finance Minister, Dr. Kwabena Duffuor, said when he outlined the measures in November 2011.
“We’re committed to Ghana in the long-term so we’ll continue to invest, but we’ll continue to engage government,” Kwame Addo-Kufuor, Anglogold’s Vice President (Ghana) in charge of corporate affairs, told the Business & Financial Times.
He said the miner has been “explaining its circumstances” to the government as the tax-changes kick in, and is looking forward to “engage more” with the state to arrive at a sustainable position.
“As you spend more capital, you will require more relief in the tax-paying schedule.”
High prices for the metal, which have more than quintupled on spot markets in the last decade, have bolstered the revenues and profits of miners; but the industry insists its costs have been rising in step as mines reach depletion and more attention is focused on the safety of operations.
“With the increased revenues have come increased costs: labour wants more, the utilities want more, higher fuel prices till recently, and all manner of input costs are going up. Again, as you mine deeper, the cost of doing so increases -- especially given that you have to mine safely and meet your environmental commitments. So it’s not as rosy as it appears to be for the industry,” Addo-Kufuor said.
The government has also taken action towards an extensive review of the industry. Last month, Dr. Duffuor unveiled a seven-member committee tasked with “reviewing” and “renegotiating” stability agreements, as well as “redesigning” other mining contracts “in the best interests of the countr”.
“What we are looking for is a win-win situation in which mining companies and the people benefit equally. The importance of the government’s strategy is to develop an economy that works for everyone,” he said.
Anglogold is among those miners that have signed a stability agreement with the government, and a review could possibly throw up legal hurdles, especially if consensus cannot be generated.
“These agreements were through due process, and I believe there is value in them for the state and the company,” Addo-Kufuor remarked.
He said Anglogold is yet to be contacted over the review of its stability agreement, and would not want to “pre-empt” any future event.
“The way forward on this is more engagement. I’m sure there are areas in which there will be room for understanding and in which we can explain ourselves better.”
Source: B&FT
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