Chamber of Mines warns of escalating costs in Ghana’s gold production
By Isaac AIDOO, Accra
The Ghana Chamber of Mines has expressed concerns over escalating costs of gold production in Ghana, painting a challenging picture for the local mining sector.
According to the Chamber’s data, the average cost of producing an ounce of gold in Ghana surged from $1,436 per ounce in 2022 to $1,542 per ounce in 2023, representing a notable 7.4% increase.
These rising production costs were attributed to various factors, including reduced gold production, inflation in mining consumables prices, and increased government imposts.
In comparison, the global average All-In Sustaining Cost (AISC) for gold production rose from $1,233 per ounce to $1,299 per ounce over the same period, indicating a higher growth rate for Ghanaian gold producers.
During the 96th Annual General Meeting held at the 17th West African Mining and Exhibition and Power Conference, President of the Chamber Michael Akafia highlighted the growing disparity between Ghana’s AISC and the global average.
The spread between the two increased from $203 per ounce in 2022 to $243 per ounce in 2023, underscoring the mounting cost pressures faced by gold producers operating in Ghana.
Moreover, the narrowing margin between the gold price and production cost in Ghana, compared to global averages, raised concerns about the country’s mining sector’s competitiveness.
In 2023, the margin for global producers stood at $642 per ounce, while Ghanaian producers only retained a margin of $398 per ounce, highlighting a significant discrepancy.
The slower rate of growth in Ghana’s margin, at 9.4%, as opposed to the 13.1% increase for global producers, signalled a worrisome trend of declining competitiveness in the country’s gold mining industry.
The development underscores the urgent need for strategic measures to address cost pressures and enhance the sector’s sustainability and long-term viability.
Newmont’s Ahafo, Akyem Mines cost grow 3.7%, 24.5% respectively.
For individual gold-producing member companies, Newmont’s Ahafo Mine reported an increase in AISC from $1,178 per ounce in 2022 to $1,222 per ounce in 2023.
This represents a growth rate of 3.7% and was ascribed to higher royalty payments, cost of sales, depreciation, and amortization.
On the other hand, the Akyem Mine, also operated by Newmont, reported an AISC of $1,210 per ounce in 2023, which was 24.5% higher than the outturn of $972 per ounce recorded in 2022.
The upturn in cost was primarily caused by higher costs applicable to sales, which in turn was due to the reduced volume of gold production and higher royalty payments.
Goldfields Tarkwa mine
According to the Chamber, the AISC of the Gold Fields-operated Tarkwa Mine grew by 3.6%, from $1,248 per ounce in 2022 to $1,293 per ounce in 2023.
The increase in AISC was due to higher royalties and cost of sales before amortization and depreciation, which was partially offset by higher gold sold and lower capital expenditure.
The Damang Mine, also a subsidiary of Gold Fields, recorded an AISC growth of 55 per cent.
The escalation in AISC from $1,083 per ounce in 2022 to $1,679 per ounce in 2023 was triggered mainly by lower volume of gold sold, higher cost of sales before amortization and depreciation, as well as a net realizable value adjustment of $34 million to stockpiles.
The pace of escalation in cost was partially moderated by lower capital expenditure.
AngloGold Ashanti’s Obuasi, Iduapriem mines
At AngloGold Ashanti’s Obuasi Mine, the AISC outturn of $1,777 per ounce in 2023 was 40.6% higher than the 2022 level of $1,264 per ounce.
This was largely on account of the lower volume of gold produced, which was partially offset by favourable ore stockpile inventory movements.
Further, the AISC of the Iduapriem Mine of AngloGold Ashanti Mine increased from $1,299 per ounce in 2022 to $1,329 per ounce in 2023.
The 2.3% growth in cost was principally attributable to the price-induced higher royalty payments, with the increase in production moderating the momentum of AISC escalation.
