Mining companies consider selling gold mines

Business News of Monday, 9 February 2015

Source: Bloomberg

Miners Working

Mining companies in Ghana are considering selling some gold mines because of an erratic power supply and a drop in the price of bullion, the chamber of mines said.

The chamber has asked the government to lower taxes on diesel, which is used to fuel generators, Chief Executive Officer Sulemanu Koney said Thursday in the capital, Accra. He declined to name the mining companies.

“I have heard of mines who are at the edge and are looking for buyers due to a combination of factors,” he said. Mining companies “can’t pile up other unplanned costs like using generators for long hours.” Minister of Power Kwabena Donkor has vowed to resign if he can’t eliminate electricity cuts by January.

The power shortage in Ghana has worsened because of a shortfall in natural gas, falling water levels at the hydroelectric dam and unexpected maintenance at plants. The government cuts power to factories for 48 hours at a time and to residences for at least 24 hours.

“The December deadline will be really tough, especially with companies with very tight margins,” Koney said.

Ghana is Africa’s second-biggest gold producer, with output of 107.9 metric tons in 2013. Producers of the precious metal that mine there include AngloGold Ashanti Ltd., Newmont Mining Corp. and Gold Fields Ltd.

South Africa is the largest miner of bullion in Africa. The commodity has fallen about 34 percent since reaching a record high in 2011.

AngloGold is seeking a joint venture partner for its Obuasi mine in Ghana, Chief Executive Officer Srinivasan Venkatakrishnan said on Nov. 3. Stewart Bailey, a spokesman for the company, declined to comment on potential deals a by phone.