Business News of 2014-06-09

Owiredu’s legacy at Ghana Chamber of Mines

The Ghana Chamber of Mines, the main association of the minerals industry in Ghana, recently held its annual general meeting (AGM) at which a new President was inducted.

Mr Dan Owiredu, who was the President of the chamber, which represents the collective interests of companies involved in mineral exploration, production and processing in Ghana, handed over the Presidency to Mr Johan Ferreira, Senior Vice President of Newmont Ghana Gold, after the chamber’s.

For two terms, Mr Owiredu led the Ghana Chamber of Mines to undertake some reforms which he graced and successfully executed, but says more still remains to be done in an industry that has seen heightened criticisms and plummeting fortunes.

Speaking to the Daily Graphic, Mr Owiredu said during his tenure, mining companies embarked on aggressive and effective corporate governance and wholesome community relations programmes that had uplifted the lives of most people in mining communities.

“Our member companies were relentless in their efforts to strengthen the bond with their host communities. They continued to embark on community programmes geared towards raising the quality of life of their host communities,” he said. He also spearheaded the Chamber of Mines to formalise the local content drive in the mining industry.

Mining industry performance

Mr Owiredu recounted that the country’s output, in terms of gold, increased by 2.1 per cent to 97.8 tonnes in 2013 but its share in total gold output remained constant at three per cent, which had caused the country to slip to the position of ninth leading gold producer in 2013 relative to eighth in 2012.

“My Presidency began in a year which started off with the gold price hovering around US$1,080. By the end of my first term, gold had scaled up to around US$1800 an ounce,” Mr Owiredu said.

“We began to plan and in some cases actually rolled out new projects and entertained visions of further growth on the basis of the relatively higher price levels,” he added.

The industry contributed 37.6 per cent of total merchandise exports in 2013 as compared to 43 per cent in 2012, the minerals sector continued to be the leading source of foreign exchange for the country.

This was confirmed by data from the Ghana Revenue Authority (GRA) that showed the total outflows from the sector to the nation’s purse was approximately GH¢1.1 billion in 2013. This amount represented 18.7 per cent of total domestic revenue mobilised by the GRA in 2013.

Wages and salaries of miners

Compensation, wages and salaries to personnel in the mining industry amounted to US$ 670 million. The total workforce in the minerals industry stood at 17,103 at the end of the year 2013. This was made up of 16,819 Ghanaians and 284 expatriates, the latter representing only 1.6 per cent of employees.

In 2013, mineral revenue from the producing members of the chamber in 2013 decreased from about US$ 5.4 billion in 2012 to $ 4.8 billion in 2013. This 12 per cent reduction in export revenue came against the backdrop of record industry output level within the last two decades, particularly gold. The 30-year highest slump in the price of gold, however, robbed the sector of the benefits of increased gold output.

Illegal mining

He said the upsurge of illegal mining with its related widespread destruction of livelihoods, water bodies, flora and fauna in 2013 necessitated the formation of a Presidency-backed taskforce to curtail the menace.

“We believe as a chamber that properly regulated and efficiently run small-scale mining has a significant role in the Ghanaian economy. This argument is evidenced by the sub-sector’s share, both regulated and unlicensed, of nearly 35 per cent of total gold output.”

He also mentioned a labour rationalisation programme, which he attributed to the ever-rising cost of inputs in 2013.

VAT refunds

Mr Owiredu described the mining sector as a bleeding one due to the inordinately large amount of surplus VAT to be refunded by the Ghana Revenue Authority. Although government has intimated in recent budget statements its intent to allow companies to set off their liabilities to government against their surplus VAT, the enabling legislation for this to be implemented is yet to be finalised.

With the foregoing, the mining companies are experiencing an acute cash flow constraint which has been worsened by the recent dip in the price of gold. Also, the recent decline in the value of the Cedi has depreciated the value of these funds.

The situation is not healthy for private enterprise and only compounds the escalating cost of doing business in Ghana.

“We urge government to expedite action in putting in place the requisite legislation to allow the set-off as intended.”

Outlook for 2014

Cost pressures emanating from the ongoing input rationalising measures in the mining industry, proposed change in excise tax model on petroleum products from specific to ad-valorem, projected shortfalls in energy supply and increases in utility tariffs, as well as the proposed increase in ground rent, are expected to further deteriorate the mood of the minerals industry.

These factors are currently balanced on a knife-edge, hence the need for utmost circumspection when any of those variables are to be altered.

Mr Owiredu is the Executive Vice-President and Chief Operating Officer of Golden Star Resources Limited (GSR), an appointment he assumed in January this year.

Prior to that, he had since October 2006, run the two mining companies of GSR in Ghana and the corporate office in Accra.

Between December 2005 and September 2006, He was the Deputy Chief Operating Officer/Africa for AngloGold Ashanti where he spearheaded the efficient use of energy and logistics at eight mines in five countries in Africa.

He was also responsible for the management of corporate relations with governments, local communities and international organisations in those five countries.

Between July 1996 and January 1998, Mr Owiredu was the Project Manager for the design, construction, commissioning and completion of the Ashanti Goldfields Bibiani mine.

The mine, including a processing plant, was commissioned two months ahead of schedule and US$3 million under-budget and Mr Owiredu was appointed its first Managing Director.

He joined Ashanti Goldfields in 1983 as Assistant Mechanical Engineer and rose through the ranks to become the first black Chief Engineer of the underground operations. He is credited with being the first and only indigenous Ghanaian to date to have successfully installed and commissioned the mechanicals and high pressure hydraulics for some of the winding engines at Obuasi Mine.

In 1993, he led a multi-disciplinary team called the executive taskforce to spearhead the change and work to float AGC onto the London and Ghana Stock Exchanges.

He has also managed the Obuasi and Siguiri mine in Guinea as the Managing Director, and was later appointed as the Chief Operating Officer for AGC overseeing Obuasi, Iduapriem, Bibiani mines in Ghana, Siguiri mine in Guinea and Freda Rebecca mine in Zimbabwe. During the merger of AGC and AngloGold, he was appointed Deputy Chief Operating Officer – Africa

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