By the Blouin News Business staff

Tensions flare at Ghana gold mine

by in Africa.

Source: Madison Boratto/flickr

Source: Madison Boratto/flickr

Mining firm AngloGold Ashanti announced on Wednesday that its head of corporate affairs in Ghana was killed on Saturday during a riot at its troubled Obuasi mine. After several years of heavy losses, AngloGold put the mine on limited operations at the end of 2014 and fired workers. Its prospects deteriorated even further last year, as costs rose while the price of gold fell. The firm needs much more investment to tap the mine’s estimated 5.3 million ounces of gold, but talks with Randgold Resources to jointly develop the site fell apart in December.

Meanwhile, local artisanal miners have been ratcheting up pressure on AngloGold to cede them some of its land. Last month the firm signaled its intention to give up 270 square kilometers (or 60%) of its concession as part of a planned program to restructure its operations. Ghana’s Minister of Lands and Natural Resources Nii Osah Mills liked the idea, and did his best to urge calm and find a negotiated solution acceptable to all. But Haruna Seidu Aboagye, Secretary of the Obuasi Small Scale Miners Association, said that what was offered had already been mined, was not economically viable, and had no attraction for members of the association.

Tensions rose, and hundreds of illegal miners wanting in on the world-class gold deposits attacked the mine on several occasions over the past two weeks. Now AngloGold is demanding that Ghanaian troops be redeployed permanently to provide security, as had been the case up until recently. Hardly appealing for potential investors.

The Ghanaian government has not yet responded to the troop demand, but on Wednesday AngloGold said it had suspended the search for a new partner to reopen Obuasi. First an investment agreement must be secured with the government, and then a feasibility study into restarting the mine must be completed with satisfactory results.

Local police are now patrolling the mine, but that won’t be enough to assuage AngloGold’s justified concerns over safety. Obuasi seems farther away from reopening now than ever before. With no resolution in sight, the grievances of the local miners and communities (many of whom got raw deals in relocation when the mine opened, and whose streams are now polluted by tailings) will keep boiling over. Bad news for everyone involved, and if the situation becomes untenable even AngloGold might pull out entirely.

The price of gold will really have to rise in order to make this mine attractive again.