Business News of 2014-08-16

‘Obuasi mine turn-around is critical’

Kwame Addo-Kufuor, Vice President, Corporate Affairs of AngloGold Ghana, says the Obuasi Mine’s turnaround is a critical story to the company, and also to its immediate community.

He said the mine’s operational challenges are quite significant as production has been in decline since 1995, reaching a 30-year low of 239,000 ounces in 2013 -- necessitating a major intervention to address significant operational and cash flow challenges that the mine faces in order to secure its long-term future.

“We cannot continue this way, because we will not have Obuasi Mine in a few year time if we don’t undertake important interventions.

“We have submitted the plans to government and the way forward in ensuring that we overcome this operational challenge is by restoring the mine to a sustainable state: a smaller merchandised, more viable operation that has a chance of survival in a low gold price environmental,” Mr. Addo-Kufuor told B&FT in an interview in Accra.

He explained that the company will continue to dialogue with a range of stakeholders in the country as it implements measures aimed at addressing the long-running underperformance of the Obuasi Mine.

“We’re committed to engaging with government, our employees and the other important local and regional stakeholders throughout this process as we work to return this key asset to sustainable, long-term profitability for the benefit of all constituencies,” he said.

As part of the consultation efforts, last month AngloGold Ashanti submitted its Amended Programme for Mining Operations (APMO) to the government and key regulators for review, and this is expected to be followed by a two-month consultation period.

The APMO provides details of the technical, environmental, financial and social aspects of the mine’s envisaged transition.

The APMO, required under Section 45 of the Minerals and Mining Act 2006 Act 703, will include a detailed feasibility study to determine future scope, cost and economics of the Obuasi Mine. This will form the basis for future investment decisions.

Fred Attakumah, Managing Director of AngloGold Ashanti Ghana, said: “Addressing the underperformance at Obuasi remains a key objective for us.”

The restructuring and repositioning of the Obuasi Mine remains dependent on key consents and has resulted in a substantial reduction of the mine’s existing operations and a significant workforce cut, which started this year.

AngloGold Ashanti is in close dialogue with its workforce and their organised labour representatives to assist with financial planning ahead of redundancy payments, and is also assisting affected employees to find other employment where possible.

Further fundamental changes at Obuasi Mine aimed at systemically addressing legacies, infrastructure, development constraints and cash outflows are being implemented while surface production, exploration drilling and decline development remain ongoing.

This work includes initiatives to reduce footprints of the operation and consolidate infrastructure, and lower operating costs by introducing a mechanised mining approach in the future -- together with refurbishment and automation of the processing plant.

The Obuasi Deeps Decline project, which started in July last year, reached an important milestone this month -- completing the decline from the surface to below the 17 Level, which is more than a third of the total decline project.

Mark Morcombe, Senior Vice President Ghana, said: “This has shown what is possible at Obuasi Mine, and is a good precursor to the mine that we’d like to develop.

“While this is a good result there is still a long way for us to go, and we need the support of our employees, our host communities and the local and national government.”

Source: B&FT
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