Moves to revamp the Obuasi gold mine appears to have hit a snag following the pullout of mining firm Randgold.
[contextly_sidebar id=”SnXHEVDorgjpMzrB0xot1ZqlYuU2dE9i”]AngloGold Ashanti in September this year announced it had entered into a joint venture with Randgold Resources Limited to revamp the Obuasi mine to a world-class high-grade mine.
But a few months down the line Randgold Resources Limited this morning announced it no longer had any intrest in the move and has abrogated its deal with Anglogold Ashanti.
The deal betweeen the two mining companies if succeful would have led to the revamping of the Obuasi mine which is currently going through a number of challenges. AngloGold Ashanti at the end of 2014, converted the Obuasi mine to limited operations ceasing underground production. The move led to the dismissal of thousands of its workforce.
Chief Executive Officer of AngloGold Ashanti Srinivasan Venkatakrishnan who confirmed the move to Business News at the time said the move will make the mine sustainable in the long term.
‘ ‘What it does mean is we will open up the mine and solve historical issues which we have addressed, some of them when addressed will generate a promising return not just for Anglogold Ashanti, even for all of the stakeholders. Currently gold and cocoa are the two big foreign exchange earners which effectively create the backbone of the Ghanaian economy and unfortunately gold price and cocoa have gone down and with this we need to revive the mine and get it to become profitable.’
Randgold’s Chief Executive Officer Mark Bristow also told Citi Business News in September after the announcement said “Obuasi is a world-class resource. We now have to see if we can convert it into a world-class mine. We have a long history of cooperation with AngloGold Ashanti and we look forward to working with them again on charting a new course towards a viable future for Obuasi.”
But Randgold Resources Limited in a statement to Citi Business News on December 21, 2015 said it has informed AngloGold Ashanti that it wishes to terminate the conditional Investment Agreement concluded in September this year for a joint venture to redevelop the Obuasi Mine.
According to Rangold its pulling out of the deal because the investment does not meet Randgold’s investment criteria.
Rangold adds its decision to pullout ‘follows concerted efforts by both companies to improve the project’s returns and also to secure an appropriate set of consents from the Government of Ghana, within an ambitious timeframe that would have allowed for a feasibility decision on the redevelopment of the mine in early 2016’.
It says although improvements were identified, they have not been sufficient to commit to a substantial investment under the prevailing conditions.
The Minister of Lands and Natural Resources of Ghana has approved continuation of Obuasi’s limited operating phase during Q1 2016.
Limited operations will be undertaken at reduced cost, compared to 2015, including maintaining the operations, security, environmental management, optimising the feasibility study, as well as ongoing sustainability work.
“We have made a concerted effort to unlock a new opportunity for Obuasi, and the work we have done lays a good foundation for the operation in the long term,” AngloGold Ashanti Chief Executive Officer Srinivasan Venkatakrishnan said.
“But in the current environment, we believe it is prudent to conserve our resources and to revisit this opportunity when market conditions improve.” He added.
Industry players have described the latest development as worrying and fear the move could lead to more dismissals of miners at the mine.
By: Vivian Kai Lokko/citifmonline.com/Ghana