Chamber advocates increases in mining royalties

The Ghana Chamber of Mines is advocating a policy to increase royalties returned by government to mining communities from nine percent to 30 percent.
 

The Chamber indicated that the increment should be tied to specific projects over a period of time.

Dr. Toni Aubynn, Chief Executive Officer (CEO) of the Ghana Chamber of Mines, disclosed this during an interaction with journalists in the Western Region at the Regional Press centre in Takoradi.

“Despite the declining gold price on the world market, the mining sector remains the highest contributor to Ghana Revenue Authority’s (GRA) domestic collections.”

The mining sector contributed about GH¢1.46billion to GRA, representing 27.04 percent of the Authority’s total direct tax in 2012.

The sector also paid an amount of GH¢893.77million in corporate tax to GRA in 2012, representing 36.98 percent of the total GRA tax collected within the period.

He indicated that mining companies returned about US$3.2billion, representing 73 percent of their mineral revenue through the Bank of Ghana (BoG) and the commercial banks in 2012 as against the statutory requirement of a minimum of 25 percent.

According to Dr. Aubynn, the sector voluntarily contributed about GH¢26million to its host communities and the general public, adding that the companies engaged 21,239 people directly out of which 334, representing two percent, were expatriate workers.

Dr. Aubynn said Ghana’s cash cost for gold production in 2012 was US$809 per ounce compared to the global average cash cost of 744 dollars per ounce.

“Global cost of gold production was up 11.4 percent from 1,079 dollars per ounce in 2011 to 1,202 dollars per ounce,” he said.

This, Dr. Aubynn explained, reflected a higher rate of increase in total cost of gold production relative to the appreciation in average gold price of 6.2 percent over the same period.

He called on government to encourage Ghanaians to invest in the mining sector.

Dr. Aubynn mentioned that most schools in the mining communities were either built or maintained by the mining companies; and that between 2006 and 2008 the mining industry contributed over US$3.5million to the country’s educational sector.

Oil palm farmers receive training

Yara Ghana Limited, a leading mineral fertiliser company in the country, in collaboration with the Ministry of Food and Agriculture (MoFA) has embarked on an oil palm training programme for farmers.

 

The training programme covered four districts in the Western Region: namely Mpohor, Wassa West, Wassa East and Agona Nkwanta.

The main objective of the programme is to promote the sustainability of oil palm production in the country through yield improvement techniques and introduction of technology, as well as proper crop nutrition strategies.

Yara Ghana also used the platform to launch its Yara Mila Palmae, a fertiliser for oil palm cultivation.

Mr. Henry Otoo, Market Development Manager of Yara Ghana, said: “Oil palm is fast becoming an indispensable crop that is catching up on the global markets, and it is therefore important to strategically position players of the industry, especially farmers, to enable them to rightfully benefit from the imminent growth of the sector”.

Farmers who benefitted from the programme as well as MoFA staff expressed appreciation to Yara Ghana for the novel training they received.

An oil palm farmer, P.A. Boateng who has farms in the Ekumfi District of the Central Region, said the “training has been very helpful to us farmers, and I hope Yara will organise these trainings programmes often”.

Yara Ghana has already trained oil palm farmers in the Eastern and Central Regions. 

According to Mr. Otoo, since 1984 the price of cocoa has been falling consistently by some 1.2 per yearly, whereas that of oil palm has been increasing by 3.2 percent. 

He added that oil palm is the most effective crop employed in most developing countries to get their citizens out of poverty. The product is also used in land reclamation programmes.

According to experts, although palm oil will likely be expensive for use as a bio-diesel, food demand due to chronic shortages of supply faced by most countries of the world will likely force the price of the commodity to increase in few years.

Ghana has been growing oil palm since the 18th century; however, lower yields and lack of technology to improve upon production continue to hamper fortunes of the industry.

Recently, it was revealed that new varieties of oil palm are capable of increasing the yield by three times more.

If further research to stabilise this yield potential is undertaken through international collaboration, palm oil can be a sound candidate to help solve not only future food shortages but also the bio-fuel need of the world.

Ghana has a total of 387,000 hectares of oil palm under cultivation, which forms just 7% of the total production within the West African sub-region. 

The average yield per hectare of oil palm is between 3-7 metric tonnes per hectare (Mt/ha) compared to that of 20-33 Mt/ha in Malaysia, where only 26% of production takes place. 

Ghana currently has an unmet demand of 35,000 tonnes of palm oil. The estimated unmet demand in the ECOWAS sub-region alone is 850,000 tonnes.

The yield per hectare in the country is quite low compared to other oil palm producing countries,but the potential to increase yield is there; the challenge has been due mainly to the underutilisation of fertiliser in the oil palm sector, especially among the smallholder farmers -- who incidentally are also utilised as out-growers for the corporate farms. Indeed, the bulk of oil palm cultivation (80%) is done by smallholders in Ghana.

AngloGold hopeful of 2014 production

AngloGold Ashanti says it anticipates a further improvements in its production in 2014. 

“Production is expected to rise to between 4.2million ounces (Moz) and 4.5 million ounces at a total cash cost of US$750 per ounce to US$790 per ounce.

According to the mining giant, s costs improved in2013, and annual production rose for the first time in almost a decade after it successfully cut spending and commissioned two new mines.

 Production in 2013 was 4.105M oz, exceeding guidance, compared to 3.944M oz in 2012 -- and the first time yearly production increased since 2005. 

Additionally, profitable production growth is anticipated in 2014. All-in sustaining costs (AISC) for the year were US$1,174/oz, down from US$1,251/oz the previous year. 

By the fourth quarter, AISC had fallen sharply to US$1,015/oz as cost saving, efficiency improvements and capital reductions bore fruit.

Tropicana and Kibali, both commissioned ahead of time and on budget in September, delivered 106,000oz of attributable production in the fourth quarter, at an average cash cost of US$532/oz.

This provides the flexibility to further rationalise marginal production while the group continues to focus on overhead and operating costs.

“Thanks to our investment made in prior years, we are starting to reverse nearly a decade of shrinking production,” Venkat said. “This gives us the flexibility to remove marginal production without compromising our base, which sets us apart in a sector that generally continues to shrink.”

AngloGold Ashanti took decisive action to counter the sharp drop in the gold price in 2013, with key initiatives to enhance revenue and reduce overhead and operating costs while maintaining the long-term optionality of the business. 

The company has more than halved corporate costs and cut exploration spending by focusing on three core regions, while the completion of its two flagship projects are expected to result in a drop in capital investment.

“We continue to refocus the entire business to give us sustainable free cash flow,” Venkat said.

Commenting on the fourth quarter data, AngloGold Ashanti saw strong quarterly improvements throughout the year across almost every metric with earnings before interest, tax, depreciation and amortization up to US$544million in the three months to December 31, a 66% improvement on the third quarter’s US$327million. 

Adjusted headline earnings normalised for various items, rose to US$164million, from US$110million in the third quarter.

 Production for the fourth quarter rose 18% to 1.229M oz compared to the third quarter, while total cash costs improved 8% to US$748/oz. AISC were US$1,015/oz in the fourth quarter, down 12% from US$1,155/oz in the third quarter. 

The strong cost reduction reflects better-than-anticipated outcomes from the companies Project 500 initiative to realiseUS$500million of operating cost savings between mid-2013 and the end of 2014.

“We’re ahead of plan on our cost savings,” Ron Largent, Chief Operating Officer: International, said. “We’re intensifying our drive to achieve additional efficiencies this year.  

“The fourth-quarter and annual production improvement was achieved alongside a record safety performance for the group, which saw 80% of the operations setting new safety records, and overall safety trends reaching their best levels in the company’s history. Tragically, eight fatalities were recorded during the year, compared with 18 in 2012,” Largent said.