Monday, December 23, 2013

Obuasi mine still making losses



Mark Morcombe, Senior Vice President of AngloGold Ashanti (Ghana) has said the Obuasi mine is far from profitability as it is still making losses.
“Although the mine is making progress in some areas, it is far from profitability as it is still making losses.
“The operation is currently undergoing ‘painful but necessary transformation’ at all levels to shore up gold production and reduce cost of production with a view to setting it on the road to profitability; citing declining gold production, increasing costs of power tariff, increasing activities of illegal mining and escalating costs.
Mr. Morcombe making remarks at the end of - year sports and cooking competition organised by the members of the Obuasi Mine Workers Wives Association in Obuasi said: “The falling gold price, is a major problem weighing down Obuasi into a protracted loss making situation.

“These challenges meant that the Obuasi mine is underperforming; it is not producing more gold to generate enough profit to improve its cash flow, hence forcing the operation to borrow unsustainably to keep it afloat.
“Obuasi is simply a loss making entity but this cannot go on forever.”
He said reversing these definitely needs strong and courageous decisions to address the challenges and fix the mine, which is one of the oldest mines in the world.
Once the biggest gold mine in the country and the leading employer in the industry -- with about 8,500 workers -- Obuasi mine has in recent years become a high-cost producer, and not produced above 400,000 ounces since 2004.

AngloGold plans to invest approximately US$200million next year in the Obuasi mine, which he reckons is still worth more than 20 years of mine-life with 9 million ounces of gold reserves.
The mine has been struggling with overage equipment, poor security, inadequate power supply, and the activities of illegal miners.
The mine also needs massive capital injection to renew its antiquated infrastructure, improve underground transport and sharpen the skills of its employee.

Mr. Morcombe said the company will be shirking its responsibility, if it fails to reverse the decline and address the fundamental challenges undermining the future of the ‘famous’ Obuasi mine, saying that ‘we are implementing painful but necessary measures to grow the company as a ‘lean and profitable operation’.
About 430 Obuasi employees have already been retrenched this year, and the signs are that more changes are being planned ahead.
The Morcombe explained that in spite of the changes made this year the mine is still not out of the woods, suggesting that more changes will be made in future to stabilize and secure the future of the Obuasi operation.
“The mine will continue to engage and update the stakeholders on ongoing activities to ensure their cooperation and continuous support,” he said.
Mrs. Doris Appiah Kubi, Secretary of the Obuasi Mine Workers Wives Association commended the company’s leaders for the strategy to turn Obuasi mine into a massive and profitable gold producer in future.
“We pledged unflinching support to the painful but necessary measures being implemented to secure the future of the Obuasi mine in Ashanti Region, but wants its share of the fortunes of the mine when things improve in future.

“We support efforts being made by management and workers to ensure Obuasi is transformed into the safest, profitable and massive gold producer in the near future.”

She was happy with the collaboration between AngloGold Ashanti and the association and offered her members readiness to help the company to reach out to other stakeholders for more support.

Mrs. Appiah said in these difficult and challenging times, where falling gold price and other factors are pushing mining companies into loss making entities, “the people need AngloGold Ashanti and the company also needs the people; so that working together through meaningful engagement will create more understanding and trust between the two.”
“We urged other like-minded groups and other fraternities to rally their support behind the mine so that together we can grow the mine for our future development,” she remarked.

Asutifi cocoa farmers unhappy with purchasing clerks



Cocoa farmers in the Asutifi area of the Brong Ahafo Region have alleged that Purchasing Clerks operating in the vicinity have tampered with weighing scales, and are thereby purchasing cocoa at reduced weighing rates from vulnerable farmers.  

Addressing a news conference in Sunyani, Eric Osafo Asuako, President of the Asutifi Farmers Network, said Purchasing Clerks have refused to use weighing stones during their transactions with farmers in order not to expose their sneaky dealing of adjusting weighing scales to cheat farmers. 

Government through the Cocoa Board has introduced some special weighing stones -- of which six with two cocoa sacks weigh 64kg, equivalent to an approved weight of a bag of cocoa. 

Purchasing clerks are supposed to conduct similar measurements of stones and sacks to indicate that their weighing scales are not tampered with before any cocoa measurement -- but this, the farmers claim, many clerks are not adhering to; thus buying at reduced weights which result in financial losses to the farmers. 

According to the Farmers Network, they have conducted thorough checks in some cocoa growing communities following complaints by the farmers, upon which they uncovered that the farmers were truly short-changed by some unscrupulous purchasing clerks. The table below shows the findings of the Network.

Mr. Asuako said many attempts to get the issue addressed have proved futile, hence the Action Aid Ghana supported press conference to express their dismay about the unpleasant development. “We called a meeting of all purchasing clerks in the district but none of them showed up. We subsequently decided to hold a meeting with the cocoa-buying companies, but our wish was also dashed there,” he lamented.

The farmers have therefore as a matter of concern appealed to the Cocoa Board and Government to lead a crusade to cleanse the system and save them from the cruel activities of some purchasing clerks. 

They further called for intensified public education about the special weighing stones, which they say most famers are not familiar with -- thus making them susceptible to the heinous operations of these clerks. 

Communities
Purchasing Companies
Approved weight per bag (kg)
Alleged new weights (kg)
Adjusted weight difference (kg)
Money value of difference (GH¢)
Gambia No.1
AkuafoAdamfo
64
58
6
19.20
Gambia No.2
P.B.C
64
63
1
3.20
Gambia No.2
AkuafoAdamfo
64
57
7
22.40
Gambia No.2
Olam
64
53
11
35.20
Gambia No.2
Merchant
64
56
8
25.60
Gambia No.2
Kuapa
64
56
8
25.60
Kojokrom
Adwamapa
64
63
1
3.20
Kenyasi No.3
Amajaro
64
57
7
22.40
Kojokrom
Amajaro
64
53
11
35.20
Gambia No.1
P.B.C
64
63
1
3.20
Kenyasi No.3
P.B.C
64
59
5
16.00
Kenyasi No.3
Olam
64
55
9
28.80
  B&FT