A clearly stated objective of AGC in its proposed restructuring is to “make Ashanti an attractive partner” or more clearly ensure “…appropriate flexibility in Ashanti’s financing arrangements to enable it to participate in the gold mining industry consolidation” This objective is so critical to Sam Jonah, the CEO of AGC, that anyone who objects to the steps and processes towards this objective is seen as unpatriotic and not wanting Ghana to be a player or become an investment house. This objective, ostensibly, is to signal to the international community that Ghana is open to business. Lonmin plc, Sam Jonah and his agents in the media are doing their best to persuade the government to give up its golden shares in AGC, as a test case for measuring how open Ghana is for global business.

By integrating and leveraging his one main objective to Ghana’s critical objective of creating the Golden Age of business, Sam Jonah would like us to give him what he wants “or else” he tells the world what kind of place Ghana is. Specifically, if Ghana does not do AGC bidding then Ghana is not a place to do business. This preposterous argument is criticized by Dr. Kofi Ellison in his piece on the golden shares when he writes, “The propaganda machine of the AGC and its surrogates continue to trumpet the rather bizarre notion that the government’s decision constitutes an anti-investment stance.” This disingenuous, deceitful, dishonest, devious and self-serving strategy of Sam Jonah and Lonmin plc supported by the deep pockets of AGC needs critical review from another perspective.

In America the saying goes “BIG IS BEAUTIFUL”. This is so much the case that fast food restaurants after introducing jumbo-sized cups for soft drinks were forced to introduce super size in order to quench the appetite for big stuff. More important, the need by corporations to grow is guided by well established investors’ criteria of getting an adequate return on one’s investment. Gone are the days when internet companies like E Toys had a market capitalization or value that was bigger than the whole of the toy industry in the United States. With the recession and collapse of the dot com sector in America in recent months many have questioned the idea of “big is better” and others have come out with ideas and slogans to beat the momentum of big for bigness sake. Thus “LESS IS MORE” has become part of Corporate America’s new mantra. It is in the light of this that I question Sam Jonah’s interest to sell us a super sized mining organization with head office operations in South Africa or London. In order to do this, I will ask a series of interesting questions.

Where is it written that the only way a mine or mines can be operated profitably or efficiently is if it is a part of a giant global operation? What is the benefit or advantage that AGC would derive from such a merger that AGC is not getting simply because it is not part of a global giant mining operations? Are there any synergies or economies of scale to be derived in becoming a cog in the wheel of a giant mining operation with head office in J’burg or London which uses basic technology? What is the purpose of global consolidation other than empire building? Are there any real benefits to local mine operations or Ghanaian operations that cannot be realized by stand alone operations? What is in for Ghana or the Ghanaian mine as a whole of having our mining operations managed by a bunch of overpriced, overpaid and underperforming silk socks wearing third rate bureaucrats in London and elsewhere? Is rationalization, merger, consolidation an end in itself? Why are small mines in the United States and elsewhere succeeding while large mines in other places failing? Apart from the ability to raise capital, which AGC succeeded in doing until it’s self-orchestrated near collapse, what does AGC need from a jumbo-sized or a super sized giant mining operation?

Rightful answers indicate that there is no basis for any consolidation other than to enrich a few, such as Sam Jonah, Goldman Sachs who helped create problems for Ghana and AGC, and certain unsavory elements in the international mining community.

If these questions do jolt your attention then one needs to go back to the real deal behind the attempt to sell AGC which is simply to help Lonmin plc obtain a return of its investment at amounts close to its initial investment and prevent the loss of its investment should AGC collapse if it is unable to get margin free operations or if it gets margin free operations which make it unprofitable to operate in the future. And all this comes about because Sam Jonah, Lonmin plc and others have mismanaged AGC and in effect have bankrupted AGC and they want to get out before the storm hits! All Lonmin plc and Sam Jonah want is to get out before all hell breaks lose.

Never mind what Ghana wants. Never mind the fate of the many poor miners. Never mind that Ghanaian investors who bought AGC at the equivalent price of $18 to $27 a share have lost significant sums of money due to the reckless mismanagement of AGC by Sam Jonah. Never mind Ghana’s strategy of protecting its natural resources, creating and maintaining high levels of employment, high foreign exchange reserves, high demand for local goods and services; never mind socio-economic benefits that necessitated the introduction of the golden shares provision. These socio-economic benefits and strategy do not change because AGC is virtually bankrupt; these benefits and strategy do not change because there is a new NPP administration; The government’s strategy and socio-economic conditions made perfect sense then and make perfect sense now!

Mining operations involve very basic low level technology. They do not need sophisticated technological equipment. Buying expensive earth moving equipment from CAT, Komastu, and John Deere is very much the technology part of the operations. AGC does not need any strategic partner since there is very little anyone can offer in terms of managing mining operations. It is interesting to note that most of the modern technology, such as hydraulic boring machines, large earth moving equipment such as dozers, etc. that AGC is using in Obuasi were introduced to AGC long before it was privatized in 1994. It is also interesting to note that workers in Obuasi’s deep mine work as hard as the miners in South Africa or anywhere. No big strategic investor or partner is going to make miners any more productive than they are now. So it is very difficult for Sam Jonah to claim that AGC needs to be part of Anglogold, Barrick, Newmont or Consolidated Goldfields to survive. Ghana cannot continue to swallow Sam Jonah’s many lies. Enough is enough!

Mining is a basic industrial operation. It is possible to have a small low cost efficient and profitable mining operation in the midst of inefficient expensive mining operations. In the United States, Peabody Holding Company, the largest coal company in the United States competes with many small efficient and profitable mining operations that are not part of giant global operations. So it is very difficult for Sam Jonah to offer to Ghana a pill which is bitter than quinine. Ghana cannot swallow this pill. It will not cure anything. In American lingo, one would say to Sam Jonah, “this dog won’t hunt” or rather Sam Jonah “this is all hat and no cattle” or more appropriately “where is the beef” before you move my cheese?!! Sam Jonah must put across credible and compelling arguments for us to believe him instead of regurgitating to us failed slogans and dogmas from his paymasters! Meanwhile, all we can say is ‘Show us the money.”
With the high grade rich quality ore obtainable in Ghana, Ashanti ought to be producing gold at less than $140/oz and increasing its profitability and its international competitiveness. Instead, Sam Jonah, Lonmin plc and AGC continue to load AGC cash operating costs with needless and useless expenditures, such as over charging AGC for contracts in which Sam Jonah has interest, contracts in which Sam Jonah knows there are clear conflicts of interests, contracts in which parties related to Sam Jonah are involved, and contracts where AGC is duped. A capable CEO ought to concentrate his efforts improving efficiency, managing the business, increasing revenues and reducing costs instead of globetrotting to collect useless accolades such as honorary PhD which he could not study to obtain; accolades that boost Sam Jonah’s big ego and do nothing for AGC and the many poor miners who cannot get good drinking water or who are in the cesspool of environmental decay. All these make sense when we say SAM JONAH MUST GO and end this cancerous episode in AGC history as well as end the incestuous relationship between Lonmin plc and Sam Jonah. It is time to close the supermarket of fraud and corruption in AGC!! It is time to shut this sewage of deceit faucet off. Sam Jonah and his cronies must get out of AGC’s business. It is time to pull the plug on Sam Jonah and send a clear message that Ghana really wants good governance in politics as well as in corporate life!
To express your disgust with AGC please email to the following:
crockerc@georgetown.edu
sam.jonah@ashantigold.com
ernest.abankroh@ashantigold.com

james.anaman@ashantigold.com

corine.gaisie@ashanti.co.uk

contact@lonmin.com

Views expressed by the author(s) do not necessarily reflect those of Ghanaweb.