Illegal mining threatens long-term viability of AngloGold’s idled Obuasi mine

JOHANNESBURG (miningweekly.com) – Dual-listed AngloGold Ashanti has warned that illegal mining activities at its idled Obuasi mine, in Ghana, and the vandalism of property may threaten the long-term viability of the mine.

It could also negatively impact the feasibility study to determine whether or not the mine could be redeveloped into a profitable and productive operation.

The company last week withdrew those employees performing nonessential functions at the mine, after illegal miners entered the fenced areas of the site. The company’s head of corporate affairs in the country, John Owusu, was killed amid a riot by illegal miners earlier this month.

AngloGold on Tuesday said the latest developments had followed the withdrawal of government military protection from the mine site on February 2.

The military protection was provided by the Ghana Army under a memorandum of understanding with the Ghana Chamber of Mines, on behalf of its members, to deploy military personnel at mining operations. AngloGold stated that no other mines with a military presence had been affected by a withdrawal of protection.

“The situation at the mine is currently calm, though AngloGold Ashanti Ghana remains deeply concerned about the prevailing conditions, with illegal miners continuing to enter the site,” AngloGold said in a statement on Tuesday.

It noted that, following engagement between the company and the Lands and Natural Resources Minister Nii Osah Mills and other government officials, the Minister had committed to sending a delegation of high-ranking government officials to examine the situation at Obuasi.

“AngloGold Ashanti awaits the outcome of the delegation’s visit and will continue to urge authorities at a national and local level to assist in upholding the law and returning safety and security to the site before further injuries or further loss of life occur,” it added.

AngloGold suspended underground mining at Obuasi at the end of 2014, after the operation incurred heavy financial losses. It was now seeking ways to revive the mine, including through potentially bringing on board a joint venture partner.

The company had, in September 2015, entered into an agreement with fellow gold miner Randgold Resources, with the latter expected to lead and fund a development plan to rebuild the mine into a viable mining business.

However, after completing a due diligence process, Randgold in December pulled out of the deal, stating that the development plan would not satisfy its internal investment requirements.