Cost Cutting Measures Continue with AngloGold Ashanti
Mining giant AngloGold Ashanti (JSE: ANG) is continuing to find ways to cut costs as the company reported less than expected earnings in the second quarter of 2014.
AngloGold reported a net loss of $28 million for the six months to end June, from a $1.9 billion loss the previous year. The world’s third-largest gold miner confirmed mine closures and layoffs were imminent to cut roughly $500 million from operating costs by December.
As part of its initiative, AngloGold Ashanti will shut down its Obuasi mine in Ghana to restructure the mine into a smaller, more profitable operation.
“Addressing the underperformance at Obuasi remains a key objective for us,” said Fred Attakumah, managing director of AngloGold Ashanti Ghana.
“We’re committed to engaging with the Government of Ghana, our employees and the other important local and regional stakeholders throughout this process, as we work to return this key asset to sustainable, long-term profitability for the benefit of all constituencies."
The company has already sold off its Navachab gold mine in Namibia for $104 million and is working to fix or sell mines or enter joint ventures on other assets.
According to chief executive Srinivasan Venkatakrishnan, the company is not entertaining the idea of an acquisition or merger. “Our focus isn't to rush into M&A but to get the operations on a better footing."
He added, “you can only do your best, you can't guarantee" that there will be no accidents.
Lower gold prices, higher capital spending and labor disputes eclipsed the company’s 17 percent increase in gold production output in Q2.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.