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.
“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.
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’.
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 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.
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