“This is as a result of about three years of mining behind a development schedule,” a management source told the Daily Graphic.
In a mining company, development means clearing out waste materials from rocks (ore bodies) that contain gold, so that miners can have access to the rocks to mine.
In addition to that challenge, the mine has been struggling with obsolete equipment, poor security, inadequate power supply and activities of about 10,000 illegal miners who are undermining production at the mine.
The planned shutdown, according to the source, would enable management to put the mine in a care and maintenance mode, which meant that parts of it, would be closed for development.
It will also enable it to inject capital to improve underground operations, sharpen the skills of employees and renew its obsolete infrastructure.
The management of the mine is currently drawing up an action plan on a redundancy strategy and the way forward, the Daily Graphic has learnt.
It has already been in talks with the government and all stakeholders with regard to the issues confronting it, the future and survival of the mine.
AngloGold is expected to hold this year’s annual general meeting (AGM) next month, where a major decision on the way forward is expected to be taken.
Care and maintenance
“Currently, we are in an “operate and fix” mode, which means operating and fixing problems but management thinks we need to switch to a “care and maintenance mode.”
“It doesn’t mean closing down, but to close part of the mine and develop there,” the source said.
The care and maintenance mode will see the contractor, Bynkurt —from Australia, clearing waste from mine areas and preparing the ore body for mining to resume afterwards. Many workers are to be laid off during the period.
The source said the problems at Obuasi were not an issue of the gold finishing. “There is still gold but we need a lot of capital and labour restructuring to restore the lost glory of Obuasi,” it said.
“A total of 430 workers were for instance retrenched last year and it is likely more would be retrenched in the near future,” it said.
It said Obuasi had huge potential but would only realise that potential if it was taken through the major transformation.
When contacted, the Deputy General Secretary of the Ghana Mine Workers Union (GMWU), Mr Eric Kwabena Gyimah, said the union had been informed about the developments at Obuasi.
He said in the wake of the problems facing the mine, two scenarios were considered, liquidation and a shutdown for care and maintenance.
“Liquidation is out of the question since Obuasi has a future and still holds the key to Ghana’s gold,” Mr Gyimah said.
He said at a meeting with all stakeholders, management of the mine was asked to present an action plan and that was what everybody was waiting for.
He said their interactions with management indicated that Anglogold was committed to turning the fortunes of the Obuasi mine around, since it holds a lot of potential.
Mr Gyimah said the action plan would tell how many workers would be laid off, those to be retained or re-engaged when the mine re-opened, terms and conditions and many other issues.
He said in spite of the problems, the mine was still viable and still held the key to the future of mining in Ghana.
He said the union would ensure that workers got the best offer.
The Obuasi Mine, which was incorporated in 1897, was at a certain point contributing about 40 per cent of Ghana’s foreign exchange earnings.
It had a total workforce of about 13,000 in 1996 when its highest production was 934,000 ounces of gold but it now employs about 7,000, including contractors working in the mine.
The annual reports from the mine indicate it is not in good shape now. It has in recent years become a high-cost producer and not produced above 400,000 ounces since 2004. It has over 20 years of mine-life, with nine million ounces of gold reserves.
Last year, it produced 300,000 ounces of gold.
With the drop in the gold price, mining companies are struggling to keep the cap on rising cost of operations.