Gold Fields earmarks US$17m to fix deplorable Tarkwa-Damang road - BFT Online
Gold Fields Ghana Limited says it has earmarked between US$15 to US$17million towards the construction of the deplorable 30-kilometre Tarkwa-Damang road in the Western Region. The company said the decision to construct the road is an affirmation of the company’s commitment to the country and communities in which it operates. “We have not even quantified the benefits. These will be realised over time, but they should improve safety on the road. We hope to create a much safer environment,” Vice President & Head of Stakeholder Relations, David Johnson said in an interview during a tour of the two mines. A trip on the road revealed that although the contractors were on site, its deplorable nature was creating loads of problems and making it extremely difficult for drivers and other road users in the community. It also makes it difficult for farmers to transport food produce from the various farm-gate to the near-bye communities. The rehabilitating of the road, comes at a time when the country’s lead gold miners, Gold Fields is expected to save over 2,000 jobs at the Damang Mine after it finalised a development agreement with government for its two operational mines in the country. Mr. Johnson was optimistic that the development agreement between the company and government completed in March, this year, will serve as a fiscal incentive and encourage shareholders to inject over US$2.5 billion into its operations in Tarkwa and Damang between now and 2027. Although a requirement for renewal under the agreement, US$2.5 billion new investment is needed to help stimulate growth in the Tarkwa operations and revive the Damang Mine, where growth has stagnated over the past five years due to challenges with rising costs of production and persistent declining gold prices at the world market. “We needed a stable fiscal environment that will help us to make an informed decision as to investments. So, having the development agreement actually helps us a lot in making that decision,” he said. Under the agreement, the corporate tax rate has been reduced from the existing 35% to 32.5%, which took effect from 17 March 2016. The agreement also highlighted a change in the royalty rate, from a flat 5% of revenue to a sliding scale royalty based on the gold price with effect from 1 January 2017. According to the company, the agreement was meant for a period of 11 years at Tarkwa, while it will be nine years for Damang which was expected to save 2,000 jobs at the Damang Mine and also renewable for another five years. “Gold Fields said in a statement: “Ghana continues to be a key region for Gold Fields, and we commend the government of Ghana for creating a fair and competitive environment in the country.” The agreement is expected to save 2,000 jobs at the Damang Mine, which could be lost if the mine is placed under care and maintenance. Johnson explained that about US$2 billion new investments within the 11-year period, would go into the Tarkwa operations, which is considered the biggest surface mine in West Africa, with the remaining US$500 million going into the Damang operations. Beyond creating a level playing field for Gold Fields to properly compete in the country, Mr Johnson said that the agreement also provides fiscal certainty for the company, as it eliminates doubt that is often occasioned by the periodic adjustments in taxes, royalties and other statutory payments. The authorities have hailed the revival of the Damang mine due largely to the development agreement, after AngloGold Ashanti suspended its Obuasi Mine last year, while it develops a new plan at the perennially loss-making mine and seeks a partner to restart the operation. In 1993 the company signed a management contract with government to operate the mine, and a feasibility study was completed later, in 1996, on an open-pit/heap leach operation. Gold Fields acquired the 18.9% IAMGold interest in Tarkwa in 2011 and currently owns 90%, while the remaining 10% is held by the Ghanaian government. In 2001, Gold Fields signed an agreement to purchase Repadre's 90% interest in Damang. IAMGold and Repadre merged to give IAMGold an 18.9% interest in Damang and Gold Fields a 71.1% interest.
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