Mining giant, Goldfields Ghana Limited is holding back on a planned downsizing of its workforce in anticipation of rising gold prices and an improved regulatory regime.
The mining operator has however cut about 20 per cent cost of its expenditure and expansion programmes.
General Manager of Goldfields Ghana, Tarkwa, Mr Michiel Van Der Merwe at a media briefing with the Journalists for Business Advocacy (JBA) in the Western Region said the cost of downsizing its workforce might have some financial consequences to the company.
�We have worked out the numbers and I can tell you it comes at a huge cost to send workers home with redundancy and severance packages,� he said.
�So at the moment, we just have to maintain some of them on our payroll for a while, hoping that gold prices will bounce back,� he added.
The Journalists for Business Advocacy were on a media tour of some mining companies in the Western Region to interact with some mining executives on the challenges of mining companies especially in recent times when gold prices are plummeting on the world market.
�We have asked all heads to reduce their department cost by about 20 per cent in order to break even and continue to operate,� Mr Merwe said.
Gold prices, which at the beginning of April, was hovering around US$1,600 an ounce has now crashed to low record price of below US$1,200.
More than 3,500 permanent jobs are expected to be lost in an industry that has enjoyed a decade long boom as falling gold prices and rising cost blight the industry.
For Goldfields, as the commodity rises in price, the life of its mining project increases as, for example, it becomes profitable to mine lower grades of ore or higher cost ore, cautioning; �But in this context it is important to recall that commodity prices are volatile: they go up, but they also come down. When they fall below the cost of production the project is, of course, no longer viable.�
At the moment, the company is mining a lower ore of 1.2 grade compared to AngloGolg Ashanti�s Obuase mine ore of above grade six from its deep underground operations.
Elsewhere, several big companies like BHP Billiton Ltd. (BHP) have canceled or delayed projects, closed mines, and put assets up for sale and fired several workers as the outlook for major commodities worsened.
The fall in gold prices comes in spite of a rising price last year, pointing to an issue hitting many mining groups: investor concern at how production costs have risen inexorably and in Ghana, the government is introducing a windfall profit tax of 10 per cent in the industry as captured in the 2013 Budget Statement.
The main engine of Ghana�s economy that helped the nation staved off difficult times and returned about GH�1.46 billion to the Ghana Revenue Authority (GRA) in 2012. This represents 27.04 per cent of GRA�s total direct taxes collected in that year. The mining sector in 2012 was the largest taxpayer in Ghana.
According to statistics from the Ghana Chamber of Mines (GCM), the mining industry paid GH�893.77 million in respect.
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