AngloGold Ashanti poured its first gold at the Obuasi Gold Mine in December, signalling its successful redevelopment into a modern, mechanized mining operation. The mine has a clear investment framework and supportive environment created by the President of Ghana and his government, and the King of Ashanti. As the second phase of the redevelopment project continues, AngloGold Ashanti estimates mining at a rate of 2,000 tons of gold bearing ore per day from Obuasi during 2020, climbing to 4,000 tons per day by year-end.
Obuasi, which has been primarily an underground operation, was placed on care and maintenance in 2016 pending the commencement of the redevelopment project. In June 2018, the Parliament of Ghana ratified the regulatory and fiscal agreements that cover the redevelopment of the mine and the Environmental Protection Agency issued environmental permits.
With the key permitting and regulatory processes finalised, the mining services contract could be signed as another key milestone in delivering a modern, mechanised underground mining operation with 5.8Moz of Ore Reserves and 34Moz in Mineral Resource, and a life of mine extending beyond 20 years.
Obuasi has operated at depths of up to 1,500m with a continuous history of mining dating back to 1897. The mining operations are located on a concession of approximately 201km2 (20,100ha) and within a largely forested region occupied by 240,000 people who are mainly subsistence farmers.
Underground access is via two main vertical shafts and a decline access while an additional shaft is used for dewatering the extreme north of the mine. The full extent of the underground operations is 8km.
Mineral extraction, by means of bacterial oxidation of the sulphide ore, is conducted at the South Treatment Plant, which has been in operation since 1993. Tailings are deposited at the South Tailings Storage Facility, located 4km to the northwest of the plant.
The Obuasi redevelopment project will be implemented in two distinct phases.
The first blast took place in February 2019.
- Phase 1 will comprise project establishment, mine rehabilitation and development, as well as plant and infrastructure refurbishment to enable production at a rate of 2,000t per day for the first operating year. Establishment of the project and operating teams have progressed well, and all key roles have been filled:
- Detailed design has continued, focusing on the processing plant and underground infrastructure
- Critical long-lead items have been ordered
- Demolition of redundant processing plant structures has begun
- Refurbishment planning has been completed
- Works are set to begin by end March 2019
- Housing refurbishment programme has begun
- Expansion of the mining contractor’s camp is well advanced
- The underground mining fleet has been delivered and commissioned
- The underground mining contractor has been mobilised
- Operational readiness activities, including design of the mine operating systems, has progressed to plan
- Phase 2 will include refurbishment of the underground materials handling system, shafts and ventilation, as well as construction of the primary crusher, the SAG/ball circuit, carbon regeneration, a new gold room and tailings storage facility. This is expected to take a further 12 months and enable the operation to climb to 4,000t per day by the end of 2020. The operation is then expected to ramp up to 5,000t per day over the following three years.
Mine production in the first 10 years will focus on the upper orebodies and is expected to average 350,000oz to 450,000oz annually at an average head grade of 8.1g/t. In the following 10 years, average annual production of 400,000oz to 450,000oz is forecast. Total cash costs are expected to average between $590/oz and $680/oz and all-in sustaining costs between $750/oz and $850/oz.
Achievements to date
Local economic development
“As a company, we are committed to ensuring that the redevelopment of this mine is rewarding and inclusive of all stakeholders.”
Kelvin Dushnisky, Chief Executive Officer, AngloGold Ashanti
AngloGold Ashanti has demonstrated its commitment to increasing meaningful local participation in the redevelopment of the Obuasi orebody by encouraging the creation of a joint venture.
The $375 million, five-year underground mining contract will be undertaken by Underground Mining Alliance Limited (UMA), a joint venture between Australia’s African Underground Mining Services (AUMS) and Accra-based Rocksure International, a wholly owned Ghanaian mining contractor, which will help develop mechanised, underground mining expertise within Ghana’s local mining and engineering sectors.
Around 550 people, predominantly Ghanaians, will be employed and trained by the contractors for the duration of the contract, allowing for the transfer of knowledge and skills.
Rocksure, which has a strong track record in open-pit mining, will work closely with Australia’s AUMS, which has significant experience in underground mining. Rocksure will have a 30% stake in the joint venture and AUMS the balance.
UMA will provide the full suite of underground mining services at Obuasi while AngloGold Ashanti will supply major capital equipment. To facilitate the joint venture and to save on operating costs and import duty, AngloGold Ashanti purchased the mining fleet at a cost of approximately $46 million. As announced in November 2018, this mining fleet purchase increases the initial project capital expenditure range from $450 million to $500 million to $495 million to $545 million. However, at the same time, this purchase reduces the contract rates over the period of the contract and is estimated to improve All-in sustaining costs (AISC) by approximately $25/oz. Given the delayed receipt of permit approvals in 2018, some capital expenditure has been deferred from 2018 into 2019 and from 2019 into 2020. The latest outlook on the capital spend profile is expected to be 10%, 60%, and 30% in 2018, 2019 and 2020, respectively.
The people of Obuasi
This section features profiles of the people behind Obuasi. Please check back monthly
for new stories.
Completing the Obuasi jigsaw
Graham Ehm, as Executive VP Group Planning and Technical at AngloGold Ashanti (AGA), has given his strategic oversight on several major mine development projects in his more than 20 years with the company. The Obuasi redevelopment project, though, might just be the most complex yet.
“A greenfield project involves the construction of new plant and infrastructure, and the building of a new operating team. However, Obuasi’s reconstruction involves the demolition of old and redundant plant and infrastructure, the extensive refurbishment of existing surface and underground infrastructure, and the construction of new facilities. In regard to operational readiness, the organisation and systems require a full redesign, recruitment and training to establish a modern organisation, and an integrated and accountable culture. A key challenge is integrating all these pieces, and still delivering the project on time and budget,” he says.
Graham explains that, in many African countries, mining companies can no longer work in isolation.
“True to AGA’s values and as expected by our key stakeholders, we are also aiming to undertake the reconstruction and operational readiness with the most Ghanaian participation possible, in procurement, contracting, direct and indirect employment,” he says.
The stakeholders include the Government of Ghana, traditional and local leadership, and the wider Obuasi/Adansi communities. The expectations are very high, and AGA is managing those expectations through clear and transparent policies and procedures.
“Nevertheless, we are unlikely to satisfy everyone. The new Obuasi will employ more skilled and considerably fewer people than in the past. This is not just a trend in Ghana but throughout Africa and the developing world.
“To sustain Obuasi’s success, the employment relationship needs modernising. We need to move away from the old multi-layered, hierarchical command and control models to a participative, engaged and empowered workforce in a much flatter organisation built on clear accountabilities,” says Graham.
At Obuasi AGA has introduced modern employment contracts, fair compensation based on annualised salaries. It’s not just best practice; it is what investors expect.
“We’re working with a lot of people understanding the scope of their roles and trying to put in place a modern operating mine system with defined systems and processes that help to train people to establish accountability and self-motivation. If we don’t get the culture of accountability in place, we won’t be successful,” he says.
This process of instilling a change in the work culture is one of the project’s biggest challenges.
Graham’s role with AGA sees him travelling to all the Company’s major projects but right now hardly a month goes past when he doesn’t find himself at Obuasi. His role is the interface for the team on the ground with the wider group and to ensure that the Obuasi team has all that is needed to successfully deliver the project.
“Achieving this is multi-disciplinary,” he says. “Each member of AGA’s Executive has a part to play. Ria Sanz (EVP: General Counsel, Compliance and Company Secretary) and Tirelo Sibisi (EVP: Group HR) are members of the AGA Ghana Board. Sicelo Ntuli (Chief Operating Officer: Africa Operations) will shortly join the Board and will ultimately be accountable for the mine when the redevelopment has been completed. Stewart Bailey (EVP: Corporate Affairs and Sustainability) monitors the project from a political, sustainability and investor viewpoint. Christine Ramon (Chief Financial Officer) manages the flow of funds to develop the project. Our CEO, Kelvin Dushnisky, has to be sure the project fits and is delivered within AGA’s overall strategy.”
AGA has to ensure that Obuasi integrates into the wider company when the project is completed and handed over for management under the Africa operating structure. A technical committee has been established to assist and support the team.
“It’s my role to oversee the integration of the new Obuasi into the Africa organisation and align systems with the rest of the company, so that when the transition from development project takes place the wider company doesn’t get an apple when it expected an orange,” says Graham, perhaps, making light of the extent of his task.
While we have a project and operations team directly delivering the project, many others are making a substantive contribution.
“We can make a big success of Obuasi. It has a 20-year mine life at 450 000/oz a year and there is scope beyond that. It’s an excellent project.”
Recent media releases
- AngloGold Ashanti’s Obuasi Gold Mine Pours First Gold – On Time and On Budget
- AngloGold Ashanti Ghana sets record straight on retrenchment packages
- Obuasi Mine records 1 million Lost-Time-Injury (LTI) Free Man-Hours
- AngloGold Ashanti signs Obuasi mining contract with AUMS, Ghana's Rocksure
- AngloGold Ashanti receives Obuasi environmental permits
- AngloGold Ashanti says Ghana parliament ratifies Obuasi agreements
- AngloGold reaches accord with Ghana over Obuasi investment framework
- AngloGold Ashanti Ghana Limited update on directive to restore law and order at Obuasi
- AngloGold Ashanti Ghana awaits outcome following Ghana Minerals Commission directive
- AngloGold Ashanti Ghana update on Ghana Minerals Commission directive
- Response to comments by WACAM on Starr FM, 4 September 2016
- AngloGold Ashanti Ghana Updates on Limited Security Deployment and Safety Situation at Obuasi Mine
- Response to comments regarding Obuasi Mine on Ultimate FM
- AngloGold Ashanti Ghana Asks World Bank Body for Urgent Order to End Obuasi Invasion
- AngloGold Ashanti Ghana Again Urges Obuasi Resolution After Deaths on Site
- AngloGold Ashanti Ghana receives update from Regional Minister
- AngloGold Ashanti Limited provides update on Obuasi security situation
- Open letter on the illegal mining situation at the Obuasi Mine
- Open letter on the illegal mining situation at the Obuasi Mine
- AngloGold Ashanti updates on rapidly deteriorating situation at Obuasi Gold Mine
- Update on restoration of security to Obuasi Gold Mine
- Restoration of security to Obuasi Gold Mine
- AngloGold Ashanti Implements Surrender of 60% of Obuasi Concession; Renews Call for Security
- Statement from AngloGold Ashanti Ghana
- Update on illegal mining situation at Obuasi Gold Mine
- Update on illegal mining situation at Obuasi Gold Mine
- Update on illegal mining situation at Obuasi Gold Mine
- Statement on the death of John Owusu, Communications Manager at Obuasi mine
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