AngloGold is trying to sell its last South African operations, but in Ghana, where it has had some serious setbacks, the company is staying the course. A ceremony to mark the restart of its Obuasi gold mine in Ghana was held this week. Ghanian President Nano Akufo Addo was in attendance, underlining the importance of the precious metal to the economy of a nation once known as the “Gold Coast”. 

The first gold bars in more than five years were poured at Obuasi on 18 December 2020 – an announcement that went largely unnoticed at the time because it coincided with the festive season.

“This first phase of the project was delivered on time and on budget, and is now being followed by the second phase through 2020, where the tonnage of ore-bearing rock mined from underground will double to 4,000 tons per day as gold production ramps up,” the company said in a statement on Thursday, 30 January 2020. 

This marks a dramatic turnaround in Obuasi’s, and AngloGold’s, fortunes. In 2014, the loss-making mine, which had operated for over a century, was temporarily closed and thousands of miners were laid off as the company considered its options for the asset. 

That left it a sitting duck, and one with a 30-million-ounce ore body. An apparent breakdown in law and order in the region saw the mine invaded by thousands of artisanal miners, who were estimated to number 12,000 at one time. During that occupation, which was marked by flare-ups of violence – a Ghanian manager was killed during a riot at Obuasi in 2016 – any revival plans were placed on hold. 

In early 2017, AngloGold announced that the Ghanian army had “largely cleared”, Obuasi of illegal miners, setting in motion plans to bring the mine back to life. That has now started.   

AngloGold has earmarked $495-million to $545-million to transform Obuasi into an underground mechanised operation that will produce 350,000 to 400,000 ounces of gold annually for the next decade. 

Extraction costs are roughly $800/ounce at a time when bullion’s spot price is close to $1,600/ounce, so it looks set to be a cash spinner. In its second decade, the mine’s annual production is expected to increase while costs are predicted to decline. So it clearly has a future and the initial capital outlay is not massive by current standards. Building a mine from scratch would cost a lot more. 

AngloGold is also clearly at pains to maintain what in mining lingo is called a “social licence” to mine – which means getting community buy-in so the locals don’t protest over jobs, or launch another invasion armed with picks and shovels. The eviction of thousands of illegal miners must have left some resentment in the air.  

“The mine will help fund an array of social investment projects,” AngloGold said. These include an anti-malaria project, a 120-bed hospital that already services the local community, a school and a university campus. 

There are obvious contrasts here with South Africa, which will next week host the annual African Mining Indaba in Cape Town. AngloGold is likely to exit the South African mining scene as it attempts to sell Mponeng, the world’s deepest gold mine with shafts that descend 4km below the surface. But in Ghana, after a turbulent bout of social unrest, AngloGold has held its nerve and is now transforming a problematic asset into a profitable, mechanised mine. South Africa’s sinking gold industry, which will try to promote itself in Cape Town, can only dream of such happy endings. BM