Gold Fields to rehabilitate deplorable Tarkwa-Damang road

Gold Fields Ghana Limited is confident of commencing construction work on the deplorable 30-kilometre Tarkwa-Damang road by the second half of this year at a cost of US$15million.

 

The company’s Chief Executive Officer, Mr. Nick Holland, said the decision to construct the road is an affirmation of the company’s commitment to the country and communities in which it operates.

“We have not even quantified the benefits. These will be realised over time, but they should improve safety on the road. We hope to create a much safer environment.”

This development comes at a time when the mining giant is expected to save over 2,000 jobs at the Damang Mine after it finalised a development agreement with government for its operational mines in the country. 

Under the agreement, the corporate tax rate will be reduced from the existing 35% to 32.5%, effective from 17 March 2016.

The agreement also highlights a change in the royalty rate, from a flat 5% of revenue to a sliding scale royalty based on the gold price with effect from 1 January 2017.

According to the company, the agreement will be for a period of 11 years at Tarkwa, while it will be nine years for Damang. “The agreement is expected to save 2,000 jobs at the Damang Mine.” Each term is also renewable for another five years.

Gold Fields said in a statement: “Ghana continues to be a key region for Gold Fields, and we commend the government of Ghana for creating a fair and competitive environment in the country”.

The agreement is expected to save 2,000 jobs at the Damang Mine, which could be lost if the mine is placed under care and maintenance.

The reduced payments to government will also feed into the review of Damang, which Gold Fields CEO Nick Holland said late last year could either be put onto care and maintenance, or have an injection of capital to widen the 10-year old pit and extend its life.

“The question is whether the gold price is actually high enough for us to have the guts to spend the money at this stage,” Mr. Holland said last month.

The authorities are reluctant to see another gold mine close after AngloGold Ashanti suspended its Obuasi Mine last year, while it develops a new plan at the perennially loss-making mine and seeks a partner to restart the operation.

In 1993 the company signed a management contract with government to operate the mine, and a feasibility study was completed later, in 1996, on an open-pit/heap leach operation.

Gold Fields acquired the 18.9% IAMGold interest in Tarkwa in 2011 and currently owns 90%, while the remaining 10% is held by the Ghanaian government.

In 2001, Gold Fields signed an agreement to purchase Repadre's 90% interest in Damang. IAMGold and Repadre merged to give IAMGold an 18.9% interest in Damang and Gold Fields a 71.1% interest.