Parliament adopts report on AngloGold agreement

Accra, Feb 12, GNA- Parliament on Thursday adopted the Report of the Committee on Mines and Energy on the Stability Agreement between the government and AngloGold Limited of the Republic of South Africa.

The stability Agreement seeks to create an enabling economic, fiscal and stable environment for the protection of investment, that AngloGold wishes to make in a proposed enlarged company with Ashanti Goldfield limited, under which they intend to pool their resources to become one legal entity under the name, AngloGold Ashanti.

Under the agreement, Ghana is requested by AngloGold to extend the term of mining lease relating to the Obuasi Mines due to expire in 2024 by 30 years until 2054.

Moving for the adoption of the report, Mr. Albert Boadi-Mensah, chairman of the Committee on Mines and Energy, who presented the Committee's report, said considering the increase in the value of Ashanti shares and global dominance of AngloGold Ashanti, coupled with the expected increase in the capitalisation and technical expertise to be derived from the merger, the agreement should be ratified. He said other benefits to Ghana, include the expected market capitalisation on the Ghana Stock Exchange, the envisaged job creation, increased revenue mobilisation for government and the anticipated community development.

"The committee observed that the additional 2,685,000 shares coupled with the 6,373,650 shares to be received by the government for its 17.2 per cent stake in Ashanti would increase the government's 2.4 stake in the enlarged company by approximately one per cent to 3.4 per cent."

"As at October 28, 2003, the proposed additional shares were valued at 100 million dollars. Meanwhile the share value of AngloGold continues to appreciate. On the basis of dividends paid by AngloGold in 2002, the expected dividends on government's 3.4 per cent stake in the new AngloGold Ashanti are estimated at 11 million dollars annually."

"This would be the highest single dividend ever to be received by government in the history of mining in Ghana," the Chairman said. He explained that AngloGold proposes to spend 220 million dollars on the existing Obuasi Mine over the period starting January 1, 2004 to December 31, 2008.

He said the committee observed that if the agreement was ratified the expected expansion would create more employment opportunities for the absorption of those who have already lost their jobs as a result of Ashanti's financial problems.

AngloGold Ashanti would also "establish and maintain a community thrust in Ghana to which AngloGold will contribute a total amount of one per cent of its profits generated in Ghana annually." He said the company would implement programmes pertaining to malaria control and improvement of health and safety.

Mr. Boadi-Mensah said clarification was sought on the effects of the merger on government's golden share in Ashanti and it was explained that AngloGold was now a global company, and the golden share would be applicable only to the assets and liabilities of AngloGold Ashanti in Ghana.

He said some members of the committee wondered if the transaction between Ashanti and AngloGold did not require Parliamentary approval but it was however explained that the agreement was between two independent limited liability companies and the consent of the government was sought only as an important shareholder.

Nonetheless, he said the stability agreement was sought from government as a regulator and this required the extension of mining lease and tax exemptions and therefore needed Parliamentary approval as required by law.

Mr. Boadi-Mensah said under the agreement, the government would also permit AngloGold Ashanti and any or all of its subsidiaries in Ghana to retain up to 80 per cent of their export proceeds in foreign currencies offshore in their bank account or if such banks accounts are opened in Ghana, the government guarantees the availability of such foreign currencies credited into these banks accounts.

The government, he said, was also requested to agree that AngloGold Ashanti's Ghanaian operation would not be adversely affected by new enactments, orders or by changes to the levels of payment of any customs or other duties relating to mining operations, taxes, fees and other fiscal imports or laws relating to exchange control, transfer of capital and dividend remittance for a period of 15 years.

Mr. Seidu Adamu, Ranking Member on Mines and Energy Committee, said the AngloGold agreement was a "sell-out."

He touched on the lack of proper evaluation of Ashanti Gold Fields assets and questioned why the transaction agreement and supporting documents on the agreement were not made available to Parliament for proper scrutiny to ensure informed judgment on the agreement.

Mr. Adamu said it was wrong to grant mining concessions to a company for several years and go into an agreement when everything was not transparent and this he said, could lead to an exploitation of the part of the AngloGold.

Mr. Joseph Darko-Mensah NPP-Okaikwei North, said the agreement would benefit the communities since the thrust of the company's investment agreement was to help reduce poverty.