Accra, Ghana — 02 October 2013 – AngloGold Ashanti Limited, the world’s third-largest producer of the precious metal, says it plans to cut 400 jobs at its Obuasi mine in Ghana by end of the year to rein in costs as the decline in the price of bullion erodes profit.
“The current cost structure is not appropriate; we are transitioning to a more mechanised operation,” said Mark Morcombe, the senior vice president in charge of the mine, said here in an interview with Bloomberg News. “The transition is for a three-year period, which will result in more efficient operations.” Obuasi employs 4,800 people.
To combat higher costs and the retreat in the bullion price, Johannesburg-based AngloGold has suspended its dividend; is cutting spending and exploration; and is laying off 40% of the 2,000 employees in its corporate offices. The company, with 21 operations in 10 countries, reported a loss in the second quarter to the end of June after the metal’s price had dropped 23% in the period, a record quarterly decrease.
Gold output in the West African nation, the continent’s largest producer after South Africa, may fall as much as 18% this year after the drop in prices prompted some mines to cut production, Minerals Commission CEO Ben Aryee said on September 20.
Gold Fields Limited , which also mines in Ghana, was forced to temporarily shut its operations in the country in April after illegal strikes that halted more than 40% of the Johannesburg-based company’s output.
Newmont Mining Corporation, which has the Ahafo operation and Akyem project in Ghana, is forecasting about 300 job cuts by the end of the year as part of a “restructuring process,” according to Adiki Ayitevie, the company’s regional manager in charge of communications.
“The situation is quite terrible; we will be losing about 2,000 jobs by June,” Prince Ankrah, general secretary of the Ghana Mine Workers Union, said by phone. “We understand the situation and are negotiating the best and fair deals for all parties.” The organisation represents more than 20,000 employees in the industry.
Output at Obuasi increased 18% to 58,000 ounces in the three months ended June 30 from the previous quarter. Total cash costs declined 10% to US$1,560/oz. Gold declined 2.8% to US$1,291.78 by 4:35 p.m. in London yesterday, extending the drop this year to 23%.
AngloGold also operates the Iduapriem mine in Ghana, which has a staff of 1,200, Morcombe said.
The company’s shares slumped 3.7% to R129.51 by the close in Johannesburg yesterday, extending the plunge this year to 51%. The stock’s retreat matches the fall of Gold Fields in 2013. They are the worst performers in South Africa’s 165-member FTSE/JSE Africa All Share Index (JALSH) after Harmony Gold Mining Company, which retreated 55%.
Source: Bloomberg News. For more information, click here.