Gold Fields under pressure: Pressure is increasingly piling on South African mining giant, Gold Fields Ghana Limited (GFGL), to rescind its decision to retrench more than 2,000 workers.
According to the Centre for Social Impact Studies (CeSIS), a non-governmental research and advocacy organisation, the path the company is taking is a “glaring case of corporate greed” that “must not be countenanced in our country again.”
The Centre posits that the move by Goldfields Ghana to retrench the workers has come as a surprise to many Ghanaians. “In our opinion the exercise smacks of bad faith on the part of the company, after virtually blackmailing the Government of Ghana to enter into a Development Agreement with it in early 2016.”
In that Development Agreement, GFGL enjoys incentives such as a reduced corporate tax from 35 percent to 32.5 percent. Additionally, the company will be paying royalty at the sliding rate of 3 – 5 percent, instead of the flat rate of 5 percent indexed to the price of gold. The Agreement is valid for 11 years.
Admitting to the benefits which it will enjoy under the agreement, GFGL states on its website that the fiscal concessions it was given under the Agreement is saving it up to US$33 million a year, effective 2016.
In a recent statement issued and signed by Richard Kojo Ellimah, Executive Director, CeSIS urged citizens’ groups to lend a helping hand to Trades Union Congress (TUC) and its affiliate, the Ghana Mineworkers Union (GMU) to resist GFGL.
“While commending the Trades Union Congress (TUC) and its affiliate, the Ghana Mineworkers Union (GMU) for their resilience, we urge all well-meaning Ghanaians particularly civil society organisations to support and participate in the campaign to ensure that Goldfields rescinds its decision to retrench its workers.”
It emphasised: “This glaring case of corporate greed must not be countenanced in our country again.”
The Gold Fields plan
On January 5, 2018, GFGL issued a statement to indicate that its “owner mining model” had become unsustainable.
The reasons are that as the Tarkwa mine matures, it has to contend with the cost drivers, namely: deeper pits (meaning harder rocks, which translates into higher blasting costs); longer hauling distances for its fleet (meaning more fuel burn); increasing cost of reagents; and high cost of exploration.
“In addition to the above operational costs, there is also the year-on-year escalation of union-negotiated wage increases, the need to replace the mine’s aging fleet and the cost involved in extending the mine (mining) life,” the company said.
Therefore, it had settled on contract mining, which entails engaging “a third-party mining contractor, with a partially or fully paid-off equipment fleet,” to assume “the operational and financial responsibility for the most critical mining activities (blasting, hauling, engineering, etc),” GFGL says.
“This provides the mine with the needed flexibility to invest more in exploration and undertake the high cost of waste stripping to expose more ore for operational sustainability. Only then can the life-of-mine be extended.”
CeSIS vexed over impact
But this is not an approach that pleases civil society groups and labour unions when the potential impact is taken into account.
At the very least, it is anticipated that the move by the company will see the retrenchment of 2,150.
The GFGL recognises this concern and sought to address it in its January 5 statement, indicating as follows: “The majority of Tarkwa employees (80 – 85%), who will be affected by the change in the business model (from owner mining to contract mining), will be absorbed by the mining contractor. This was agreed with the contractor and was a prerequisite of the transaction.”
But CeSIS has scepticism and points to a similar exercise by AngloGold Ashanti. “It will be recalled that AngloGold Ashanti four years ago similarly retrenched over 5,000 workers. The negative ramifications of this exercise is still being felt in Obuasi and the nation as a whole.”
Besides, this is the second time Goldfields is laying off staff in three years. In 2014, its Damang operations sacked over 400 workers citing a similar excuse.
CeSIS forecasts that the impact of the proposed retrenchment exercise on individual households and the wider local economy will be very dire.
Almost a year after the Government of Ghana bent over backwards and gave Goldfields Ghana these generous incentives, it is disappointing to note that the company has betrayed the trust of the government. Typical of most multinational mining companies operating in our sub region, Goldfields has disregarded its own commitment and promises and rather proposed an insensitive retrenchment exercise that will see 2,150 workers losing their jobs and livelihoods.
We are saddened that the inordinate desire to reap supernormal profits has lured Goldfields to make this decision. This is a clear violation of Section 68 sub section 1(c) and (d) of the Minerals and Mining Acts 703.
In the portions of the law referenced, the law states: Section 68. “(1) The Minister on the recommendation of the Commission may suspend or cancel a mineral right if the holder…(c) makes a statement to the Minister in connection with the mineral right which the holder knows or ought to have known to be materially false, or (d) for a reason, becomes ineligible to apply for a mineral right under this Act.”
Consequently, CeSIS demands that government must “immediately halt this move by Goldfields Ghana to lay off more than 2,000 of its employees.
“With a precarious economy marked by high unemployment and youth agitations, it will be suicidal for government to approve a move by the company that will swell the ranks of the unemployed.”
By Frederick ASIAMAH
