Order is finally being restored at AngloGold Ashanti’s Obuasi mine in Ghana after up to 12,000 illegal miners invaded the operation in January this year leading AngloGold to take international legal action against the Ghanaian government.
According to AngloGold CEO Srinivasan (Venkat) Venkatakrishnan the Ghanaian military moved back onto the mine property during October and is in the process of restoring order and clearing the site of illegal miners “without anyone being harmed.”
Venkat revealed that the illegal miners were being moved by Government onto other regions where they could operate including an area comprising two-thirds of the lease area formerly owned by Obuasi but which AngloGold has now relinquished to the Ghanaian state.
The relinquished ground was handed back this year after the illegal invasion took place but Venkat denied this development formed part of a deal struck by AngloGold with the Ghanaian government to get the illegal miners out of the Obuasi mine.
He said negotiations with government had started two years ago for the return of this unused section of the “huge” Obuasi lease area.
Venkat added the number of illegal miners still operating in the Obuasi mine itself was estimated at between 1,000 and 2,000 and that AngloGold staff would re-enter the mine to assess damage done by the illegals “once it was safe to do so.” He said it was likely that the illegal miners had damaged both the surface and underground operations at the mine.
Venkat offered no reason for the Ghanaian government’s actions in allowing the invasion to take place and now taking steps to end it. He said the legal action against the government through the International Centre for Settlement of Investment Disputes (ICSID) was on-going.
In August, Venkat commented “ this is a jurisdiction where there has never been a problem with the maintenance of law and order. Now, all of a sudden , there is,” while investor relations senior vice-president Stewart Bailey said the situation at Obuasi was like something “out of a Franz Kafka novel.”
Venkat was answering questions after a media teleconference call on AngloGold’s results for the quarter ended September which reported a big jump in free cash flow to $161m which is 49% greater than the total of $108m in free cash flow generated by the group in the six months to end-June.
That was in spite of a drop in production to 900,000oz from 974,000oz in the 2015 September quarter because of lower output from both the group’s international and South African operations.
Output from the South African mines dropped 7% year-on-year because of lower grades and the impact of safety stoppages following three fatalities in July.
The issue of “unfair” Section 54 stoppages by the Department of Mineral Resources (DMR) has long been a bone of contention with the mining industry and AngloGold last week won a Labour Court ruling against the DMR over the closure of the Kopanang mine on October 17.
Asked whether he thought the DMR had stepped up Section 54 actions against the group’s mines following the severe criticism of President Jacob Zuma voiced by AngloGold chairman Sipho Pityana at the Joburg Indaba on October 5 Venkat replied, “I cannot speculate”.
Turning to the gold price – which has tumbled sharply in the wake of the declaration of Donald Trump as president elect of the United States instead of rising as widely predicted – Venkat commented, “ I see volatility in both the gold price and international currencies over the next six months until clarity emerges from the United States.”
