Anglogold Ashanti to bring economic restoration back to Obuasi

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Life and economic activities are expected to resume in the mining towns of Obuasi and its environs in the Ashanti Region following an agreement between the government of Ghana and Anglogold Ashanti for the revival of the Obuasi mining concession which was shut down over operational challenges.

In addition to jobs for the local people among other related economic activities, the Community is to get a University College, the use of an Airport facility as well as a cash contribution of 2 Dollars out of every ounce of gold produced to be accrued into a Community Trust Fund for community development initiatives.

Parliament on Thursday, ratified the Redevelopment Agreement granting stability terms to Anglogold Ashanti (Ghana) to operationalize the hither to unprofitable mine and to restore economic life to the once buoyant but now deprived Obuasi community.

The Obuasi mine underwent major restructuring programme in 2014 which was necessitated by continues losses due to operational difficulties which led to its eventual shut down.

The Obuasi community is now deprived of economic avenues due to the closure of the mine. Prior to the suspension of its operations, the company was contributing about US$ 250 million to the Obuasi community with direct employment and third-party  subcontractors of 300 and 350 persons respectively.

According to the Report of a select joint Committee on Mines and Energy and Finance, an estimated capital of about US$ 1 billion and 45 million Dollars is expected to be injected over an estimated 21 years life span of the mine with estimated mineral reserves of 6.3 million ounces of gold and other resources totaling about 33.5 million ounces.

Anglogold Ashanti is required to make an investment amounting to approximately US$ 881 million in the initial 6 years of the life of the mine which would be required for the Redevelopment programme.

In order for the mine to operate profitably for government to derive the desired revenues and for the community to reap the envisaged benefits, Parliament has also approved a fiscal concession to Anglogold Ashanti amounting to the tune of US$ 259 million Dollars under a tax concession agreement between the two entities.

Under the Development agreement, the direct economic benefits expected to accrue to the nation is estimated at US$ 5.3 billion over the life of the mine. These benefits include payment of royalties, corporate tax, contribution by way of employment and transfers to the Community Trust Fund and Local business participation.

To enhance the employment of locals and to reduce the incidence of illegal mining in the country, the Committee informed Parliament that about 60% of the concession area of the company relinquished to the state would be processed for licensing to small scale miners in the Obuasi area and beyond.

Parliament was also informed that the total number of persons to be employed directly by the company and its subcontractors would average between 2000 and 2500 over the life of the mine with expected earnings of about US$ 371 million.

Meanwhile, an estimated amount of US$ 2.4 billion is expected to accrue to local business entities during the same period with an emphasis on the compliance with the country’s Local Content Law relating to employment, the supply of goods and services and related opportunities.

According to the joint select Committee Report of Mines and Energy and Finance, Anglogold Ashanti has committed under the Development agreement, to contribute US$ 2 out of every ounce of gold produced to a Community Trust Fund to support community development initiatives in Obuasi as part of the Company’s Corporate Social Responsibilities.

Aside that the company has proposed to release some of its infrastructure to assist Government set up a University College of Mines in Obuasi and open up the company’s Airport facility to the public as well as partner the Municipal Assembly to implement its development agenda as set out in the Municipality’s Medium Term Development Plans.

Even though the Minority agreed with the motion for the agreements in principle because of the obvious benefits that may accrue to the nation at large and the Obuasi community in particular, they still raised concerns that the tax concession of US$ 259 million was too much.

The Ranking Member on the Finance Committee, Cassiel Ato Forson, observed that the country cannot continue to grant these kind of juicy tax exemptions to companies to enrich themselves at the expense of the country without the commensurate benefits.

Source: Clement Akoloh || Afriwakeradio.com

 

 

 

 

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