AngloGold to Shut Down Operations in SA, Obuasi Mines Not Affected

AngloGold Ashanti will temporarily suspend production from its South African Operations for three weeks.

This will begin from Thursday, 26 March 2020.

According to the mining company, these operations will be safely placed into care and maintenance over that period.

The decision to suspend its activities for 3 weeks is due to the increase COVID-19 cases in South Africa which have now reached 554 cases at the time of writing. The company, therefore, wants to protect its employees from contracting the deadly virus hence the temporal suspension of activities.

However, it is unclear whether its Ghana operations which is one of the most profitable in recent times will also shut down in the nearest future if the numbers of coronavirus cases keep rising. Ghana has so far recorded 52 cases of COVID-19, majority being imported.

The company in a statement said plans will be developed to help safely regain production delayed by this shutdown, where possible.

The South African operations include the Mponeng Mine, Mine Waste Solutions and surface rock-dump processing operations. These operations produced 419,000 ounces of gold for the year ended 31 December 2019.

An agreement has been reached to sell these assets to Harmony Gold Mining Company, a transaction that is expected to close on about June 30 of this year, subject to certain conditions precedent.

The company emphasised “it is continually monitoring the situation related to the COVID-19 outbreak as it unfolds and remains in close contact with authorities in each country, with our employees and with our key suppliers and other business partners, to help ensure business continuity and mitigate any interruptions that may occur”.

What happens to the mining company if the coronavirus pandemic is not contained quickly?

Like every business, AngloGold Ashanti might not meet its revenue target for 2020. This is because the company will be incurring some losses throughout the 3 weeks it's not operating due to the coronavirus outbreak.

If the coronavirus pandemic is not contained quickly in the countries the mining company operates, AngloGold Ashanti will be forced to also temporarily shut down its operations in these countries including Ghana. The company is likely to also extend the temporal suspension of operations if the cases are still high in South Africa after the 3 weeks.

The company will, therefore, incur huge losses in that situation and will be forced to take drastic measures like laying off workers to cut its operational cost.

Nevertheless, gold is trading well on the global stock markets as investors describe it as a ‘safe haven’ in these difficult times.