AngloGold Ashanti is a global gold producer with widespread operations in the Americas, Africa and Australasia. We spoke to Eric Asubonteng, Managing Director of one of the company’s two mines in Ghana, about the near future for Ghanaian gold mining, and the anticipated benefits from the company’s restoration efforts on its Obuasi mine.
AngloGold Ashanti was formed in 2004 in a business combination between AngloGold and the Ashanti Goldfields Corporation. The company currently owns a total of 14 operations in nine countries, with their activities spanning everything in the gold process from exploration and mining to the production of refined gold and its sale. Within continental Africa (excluding South Africa), the company owns seven mine sites, four of which AngloGold Ashanti manages itself. These are split between Mali and Ghana, although the company also owns sites in Tanzania, Guinea and the DRC. In Ghana, out of the company’s two mines, only one is currently operational. This is the Iduapriem Mine, which comprises the Iduapriem, Teberebie and Ajopa leases. Iduapriem is an open-pit mine and its processing facilities include a carbon–in-pulp (CIP) plant with a gravity circuit. The gravity feed recovers about 30% of the gold, with the remainder recovered by the CIP plant. As of December 2018, the mine had an ore reserve of 1.63Moz, and produces around 254,000oz per annum.
The company’s second mine, Obuasi, is currently not operational, and yet has a long history behind it, and a hopeful future ahead. The mine first went into production in 1897, and became part of AngloGold Ashanti after a merger between then-Anglo Gold and then-Ashanti Gold in 2004. Having been operational for so long, issues had developed in its operational approach that went beyond a quick fix. We spoke to Eric Asubonteng, the Managing Director of this mine, to learn more about the decision to close the mine and effectively redevelop it from scratch. “It wasn’t viable – it was operating at high cost, and the production wasn’t as efficient as it should be. The drop in gold price around 2012 obviously didn’t help either, and these inefficiencies could not be sustained any longer.” The Obuasi mine went out of commission from the end of 2015, up until mid–2018. During this time, the company ran a series of feasibility studies on the mine to determine what was to be done with it, and whether it had an affordable future. The site still has a 21–year mine-life, and a world-class ore body, so there was a great deal of potential.
Although closing the mine was a financial blow, it also gave AngloGold Ashanti an opportunity to re-examine the mine in detail, assessing its viability and the efficiencies of how it had been running. The opportunity for this detailed study led to the conclusion that, with the right work and investment, this mine could be turned around and could become profitable in the long term. The investment to do this work, spread over a three-year period of 2018-2020, totals between $495-545 million.
Eric took over as Obuasi’s Managing Director in April 2016, shortly after the mine had been shut down. Eric took the role with a strong faith in the skill and tenacity of his colleagues, as well as the potential of the mine itself. “It was certainly one of the more difficult times for somebody to take the role, because we didn’t know what the future held. My colleagues, the team on the ground and I knew the potential of the mine, and we knew that with the right changes and the right effort, it could be turned around. We saw it as a challenge that had to be met.” The redevelopment work began mid–2018, and whilst it is still underway, the mine is now safe and secure, and the company is expecting its first gold by the end of this year.
Although Obuasi had been out of commission for a few years, its involvement with the local community didn’t stop. AngloGold Ashanti has a set of solid values that it actually lives by, and doesn’t just pay lip service to, and these continued programs in Obuasi are a testament to that. Establishments such as the school and hospital in Obuasi that the company funds have stayed in operation, and the Community Trust Fund continued to roll out several developmental projects, showing that the company takes its commitments seriously, even when those commitments aren’t as easy or convenient.
Once the mine is back in business, this continued support will be enhanced with further programs in agriculture and education, including establishing a university college in Obuasi, which will train up local youth not only for this mine, but in order to equip them for the industry at large and beyond. This plan will also boost the local economy by bringing a range of businesses into the area. Speaking of business, whilst the mine is still in its restoration phase, the company is already adding to its local support, by prioritising local hire and the use of local businesses wherever it can, and supporting these businesses to help them grow their capacity to the level the mine needs.
As well as his role within AngloGold Ashanti, Eric also serves as the President of Ghana’s Chamber of Mines. This places him in the helpful position of being on both sides of the fence when it comes to advocating for conducive mining legislation: “I think the roles complement each other: you could be the President of the Chamber of Mines and not run a mine, but running the mine means I better understand the impact and knock-on effects of policies.” The dual role has many benefits, allowing Eric pre-warning and insight into how policies are changing, a direct understanding of how those policies will affect the Chamber’s other members, the ability to talk to the government from both perspectives, and the ability to manage Obuasi with full knowledge of how the Ghanaian mining industry is moving. It allows him to better help the Chamber and AngloGold Ashanti in equal measure.
When asked about the current state of the country’s mining industry, Eric was extremely positive: “In 2018, Ghana surpassed South Africa as the leading gold producer in Africa. There is a rising prominence of West Africa as a major gold producing center globally. From that perspective, I see the prospects for Ghana in the near future as very promising.” The current rise in gold price is a positive factor, but one that Eric rightly pointed out they cannot control; “We have to focus on the things that we can control, such as our costs and efficiencies.”
Ghana is currently on an upward trajectory in terms of production, and is well positioned thanks to its long history as a mining country. In fact, Eric is hopeful that Ghana could soon establish itself as the key destination in mining in West Africa: “In the future, I see Ghana being presented with a unique opportunity to be the hub of the mining industry in the west African subregion. If all stakeholders in the industry view it in the same way and approach it with the same focus and attention, then 5-8 years down the line, we could have this central hub in Ghana.” Eric foresees this as meaning that Ghana could become a ‘headquarters’ of sorts of mining in the subregion, from where all main service providers are stationed. However, he knows that this future is not guaranteed – especially when many of its neighbouring countries are also starting to flourish in the sector:
“Ghana has many advantages. The country has been very stable both politically and economically. The rule of law is very well established in Ghana, and we have a strong and long mining history. We have very high mining education – we have a full university that focuses on mining, and so on. So, we are better positioned. However, if we are not delicate about how we continue to position ourselves and taking advantage of the opportunities that we have, then down the line, we could lose that advantage to other countries. Côte d’Ivoire, Mali, Burkina Faso – in all of those countries, mining investment is on the increase, just like it is in Ghana. If we don’t act within three to five years, we’ll be losing momentum and advantage already.”
In order to achieve success, one needs to see the full potential of what one currently has, and carefully plan how best to unleash that potential. Sometimes, as with Ghana’s mining industry, it’s advisable to continue onwards on the same path, but with renewed cooperation and focus. Other times, like with the Obuasi Mine, one must be ready to stop moving, take stock, and go back to the drawing board. There is a short-term cost, but as long as you don’t lose sight of the potential that’s there, the long-term rewards could be huge. AngloGold Ashanti know this, and once Obuasi is back in production, it will have a far more profitable and exciting asset. With a world–class ore body and a good 20 or more years in it, the company was wise to invest in its redevelopment, and we look forward to hearing about the results once it is fully up and running again.