Business News of 2014-01-22

Chamber of Mines promises package for redundancy

The Ghana Chamber of Mines (GCM) has assured mine workers of “generous compensation” for those who will lose their jobs as a result of the austerity measures being adopted by mining companies.

The austerity measures, which began last year and include job cuts, have been necessitated by a reduction in production following the falling price of gold on the world market.

“I think the industry has some generous compensation package for redundancy labourers,” the Chief Executive Officer of the GCM, Dr Tony Aubynn, told the Daily Graphic yesterday in Accra.

According to him, the package on offer was the best in the West African sub-region and that was why there had not been any complaints since the lay-off exercise started last year.

Job cuts

The large-scale mining industry in Ghana employs about 16,000 people, but about a quarter of that workforce is likely to be laid off by the end of this year, as mining companies take critical measures to deal with the falling price of gold.

The GCM envisages that mining companies will lay off between 2,000 and 4,000 workers by the end of this year, but in a worst-case scenario, the job cuts will be more than anticipated.

Dr Aubynn said the redundancy exercise was being done in collaboration with social partners, including labour, and in accordance with the provisions of the country’s labour law.

He said the labour law outlined processes and proceedings to be followed in respect of retrenchment of workers.

The state is also expected to lose huge revenues from the mining industry due to the anticipated low production levels.

The large-scale mining industry contributes about 27 per cent of all tax revenue to the state, but Dr Aubynn said the downfall of gold price would affect that critical contribution from the industry to the national economy.

“We don’t expect revenue to be as high as that of 2012 because of the falling gold price. But we think it’s a transitional period and we believe that 2015 will see some reasonable positive move in the industry,” he said.

Expectations

Dr Aubynn said he did not expect an increase in the gold price until 2015 to warrant a stabilisation of the situation.

“Although I’m a very optimistic person, I cannot be optimistic this time. I don’t see gold price increasing to a very significant level,” he said.

He said under the circumstances, “I see most of our members doing restructuring” in order to be more efficient.

He explained that the restructuring would involve being leaner and looking at production areas where mining companies could maximise efficiency and mine at reasonably low cost.

Dr Aubynn said Ashanti Goldfields, for instance, was not likely to produce at levels higher than previous ones, adding that Noble Gold had suspended its operations and that might reduce the overall production of gold in the country.

He said he expected an improved working relationship between the government and the chamber this year, saying that although the relationship between the two had been generally good, it could be much better.

On the labour front, Dr Aubynn said generally the GCM had maintained a good relationship with workers, noting that that was why there had not been any major agitation in the mining sector over the past 10 years.

He, however, said more needed to be done to deepen the relationship between the GCM and key stakeholders and social partners.