‘AngloGold facing ‘enormous’ challenges in Ghana’

AngloGold Ashanti Ltd. (ANG), the world’s third-biggest producer of precious metal, will make “significant” changes to its Obuasi mine in Ghana that may include job cuts, Chairman Tito Mboweni said.

The company’s problems at the mine include labor laws that make it difficult to fire workers, outdated work practices and illegal miners, Mboweni said in an interview with Bloomberg TV Africa’s Eleni Giokos at the World Economic Forum in Davos, Switzerland.

“We need to do something significant to get our operations at Obuasi going,” he said. “It’s not simply about cutting 400 jobs. It’s not simply about work reorganization. It is about confronting the whole ecosystem.”

Production at Obuasi, an underground mine that’s as deep as 1.5 kilometers (1 mile) in places, dropped 30 percent to 58,000 ounces in the second quarter of last year compared to the same period in 2012. Falling output at mines such as Obuasi and a gold price that dropped 28 percent last year have forced AngloGold to cut spending, exploration, jobs and its dividend in 2013.

“The challenges at Obuasi are enormous and coupled with some very tough labor laws in Ghana,” Mboweni said. “Those who talk about inflexible labor laws in South Africa, they should come to Ghana.”

AngloGold derives 28 percent of its gross profit from operations in South Africa, the continent’s biggest producer of the metal. AngloGold was ordered to submit a proposal on how it plans to cut costs at Obuasi, Ghana’s Ministry of Land and Natural Resources said Jan. 15.

Gold-mining companies in Ghana, Africa’s second-largest producer, will cut 2,000 and 4,000 jobs by end this year to rein in costs over falling prices of the metal, the Ghana Chamber of Mines said yesterday.

Illegal miners are also a “huge problem” for Obuasi, Mboweni said. AngloGold employees at the mine told Mboweni that if he demanded their removal, he may “start a war,” he said.