‘Gov’t's silence on AGA shutdown worrying’

The Third World Network (TWN) Africa, a civil society group, has stressed that government’s silence on closure of the AngloGold Ashanti (AGA) mine suggests that it was an agreement with the mine’s intention to shut down the mine for what it called ‘care and maintenance’ for two years.

“For us the mine in Obuasi is not just for us, it’s for the entire nation; and Obuasi Mine is a national asset.

“The company does not regard the local people as it has breached the stability agreement it signed with the government of Ghana in 2003,” said in a statement issued by TWN Africa. The statement accused AGA of lacking expertise in deep level mining, thereby placing the Obuasi mine under “Care and Maintenance” resulting in job-cuts.

The statement again observed that the government’s decision to award the then-Obuasi Mine to AngloGold instead of Randgold was the result of purported “superior experience in deep level mining that the former was said to possess”.

The group observed among the accusations that production at Obuasi Mine in 2002 before AGA’s takeover was 500,000 ounces of gold, and that the expectation was for AGA to double the annual production -- which would have led to the creation of thousands of jobs for the people of Obuasi and its environs: but, unfortunately, production in 2013 was around 200,000 ounces of gold.

Thus, TWN Africa said, AGA does not have the otherwise superior experience in deep level mining to have been awarded the contract. AngloGold Ashanti at the beginning of this year announced its intention to shut down Obuasi Mine for a period of about two years, with the aim of undertaking what it termed “care and maintenance”.

TWN Africa indicated that over 1,000 workers have been laid-off, and in spite of ongoing discussions with government the company intends to further retrench the remaining workers numbering about 5,000 -- after which about 500 workers would be re-employed to “guard and protect” the mine during the “care and maintenance” period.

The group contended that “In 2002, the underground mine in Prestea was put under a similar “care and maintenance” for a period of two years.

“The mine has since not resumed production, resulting in dire economic and environmental consequences for the people of Prestea.

“Thousands of jobs were cut and most of the lands there cannot support farming activities following decades of mining-related pollution -- which continues today because of ongoing and widespread surface-mining.”

The group said: “The fiscal and regulatory incentives that were given under the stability agreement were given for the purposes of recapitalising and re-equipping Obuasi Mine to expand output, not a declaration of “care and maintenance”.

It further accuses AngloGold Ashanti of not paying corporate and indirect taxes to the government, thereby robbing it of revenue.

“Over the period, also, there have been concerns about the payment of taxes by AGA. According to reports by the Extractive Industry Transparency Initiative (EITI), the Obuasi Mine did not pay any corporate tax to the government of Ghana between 2004 and 2009. It is also uncertain if the Obuasi Mine has made any payments to the government of Ghana as corporate taxes beyond 2009.

“Last year, the Ghana Revenue Authority submitted tax assessments to AGA for a number of years following audits they undertook for the 2006 to 2008 to 2011 tax years. In these assessments, AGA was accused of not paying indirect taxes amounting to tens of millions of dollars over the assessment periods,” the statement said.

The group also noted that the mining company failed to establish a Community Trust Fund (CTF) when it began operations to develop its operational areas as contained in the stability agreement.

Production at the Obuasi merger with AngloGold in 2004 and 2013 ranged between 240,000 and 392,000 ounces of gold. The low production was “due mainly to underground challenges; old equipment, poor underground transport system and poor infrastructure.

The rest are over-bloated labour as well as poor prices of gold -- leading to lower production and high cost of production.”

The development of Obuasi was the responsibility of government, but AGA has over the years built schools, hospitals, and provided job opportunities for the youth, as well as an airport and modern stadium.

In 2003 government signed the first-ever stability agreement with AGA and offered a number of incentives for the company to revive the Obuasi Mine.

Among the incentives offered was a 15-year freeze in tax instruments such as royalty (at 3 percent) and corporate tax rate (at 30 percent), and the permission to retain up to 80 percent of foreign currencies obtained from the sale of gold in off-shore accounts.

The government also agreed that AGA’s “operations will not be adversely affected by any new enactments or orders or by changes to the level of payments of any Customs or duties relating to mining operations, taxes, fees and other fiscal imposts or laws relating to exchange control, transfer of capital and dividend remittance for a period of 15 years after the completion of the business combination”.