AGA’s Obuasi Mine turnaround is strategic

AngloGold’s Obuasi Mine says its turnaround strategy is to allow a systemic change to its design and operation to counter the trend of declining productivity, lack of mining flexibility, falling tonnages and soaring costs. 

 

As the operator of a range of different mines, from large open pits to the world’s most successful ultra-deep gold mines, AngloGold Ashanti is well-placed to evaluate the options to modernise the Obuasi Mine and help it provide good jobs for the long-term while contributing meaningfully to the local, regional and national economy. 

 In a statement reacting to an article published on December 3, 2014 in which the Third World Network (TWN) Africa expressed its concern at the tapering of production from the Obuasi Mine while a feasibility study into the modernisation of its operation is completed. It is worth addressing some of the points made by TWN, according to the statement.

The statement said the mine is simply not sustainable or viable under any ownership structure, and it will almost certainly be lost to Ghana’s economy without this present intervention.

Despite AngloGold Ashanti’s best efforts for more than a decade, the performance trajectory of the mine has been consistently poor; and a valid critique is that, with the benefit of hindsight, this difficult decision to fundamentally redesign the operation might have been taken earlier.

The statement again explained that AngloGold Ashanti’s intention is to reverse the Obuasi Mine’s downward, unprofitable trend and make it into a vibrant contributor at every level. 

“To be clear, tapering production while this period of re-design is concluded was not an easy decision, but at every step AngloGold Ashanti has made its intentions clear in a series of transparent dialogues with all stakeholders, including employees. 

“And while reducing employment numbers at the mine is not a decision taken lightly, those affected have been provided full and generous severance packages as provided for by law.”

It said the Ghana Mineworkers Union, with a mandate from its members at Obuasi Mine, has been fully supportive of this action.  

Similarly, the company has at every stage been fully compliant with its tax and royalty obligations to Ghana’s exchequer throughout its ownership of the mine. 

“Our two mines in Ghana, Obuasi and Iduapriem, have together paid more than US$577m in direct and indirect taxes since 2004, making AngloGold Ashanti one of the largest tax payers in the country.

Obuasi alone has paid US$324million over that period, a number that is likely to have been markedly higher if the mine was profitable. In addition, more than US$1.2billion in capital investments has been made over the past decade. 

While a large portion of Obuasi Mine will be on care and maintenance in 2015, AngloGold Ashanti has still budgeted expenditure there of some US$100million for the year, which includes development of the ramp decline to high-grade underground areas, and also the necessary cost of ensuring infrastructure remains secure and in good condition. 

The Obuasi Community Trust fund, the statement said, will also continue to run efficiently over that time -- adding to the US$55million in social projects funded by AngloGold Ashanti in the country in 2014; this excluding the US$133million in malaria prevention provided by the Global Fund.

“One of AngloGold Ashanti’s values is to leave communities better-off for its presence. In this case, that requires making some hard decisions in the short-term so that the economic engine that is the Obuasi Mine can drive the economy’s wheels in the long-term. 

“It will require cohesion and an honest and clear-sighted view of what it takes to make the mine viable for the long-term. 

“It will also need an enduring partnership from a range of interested parties across the spectrum from the company, to labour and from government to civil society. Anything less would sell short this important asset, and those that it supports,” the statement said.