Ghana starts to feel heat over Ashanti

Pressure is building on Ghana's government to drop its "golden share" in Ashanti Goldfields Co. Ltd., which is blamed for depressing the West African firm's share price by obstructing mergers.

The company has long wanted the government to give up the golden share, which helped stop a 1999 bid from platinum miner Lonmin Plc when Ashanti was in trouble after hedge book losses.

"We know we're independent, but it's not much use if what the market perceives is the contrary," Kwamena Anaman, Ashanti's managing director for public affairs, told Reuters on Thursday.

A golden share gives a government special rights in the firm's affairs.
The latest sign of pressure came in the state-run Daily Graphic newspaper, which pointed out the difference between Lonmin's 1999 offer of $7 per share and the current share price -- New York-listed shares closed at $3.41 on Thursday.

"Sometimes, national pride and the reality of serious business cannot be reconciled, and that was the price we paid for our sentimentality," the Graphic said.

"In order to restore value in the Ashanti share price, the government would have to take immediate action to remove any residual notions of government interference in what, after all, is a public listed company," the paper said.

The Lonmin bid failed because of opposition from the government of President Jerry Rawlings, who stepped down in January after opposition leader John Kufuor won a presidential election.

Kufuor is widely seen as more pro-business and likely to drop the golden share.

Sources at Ghana's government-appointed Mining Commission told Reuters earlier this week that it had recommended relaxing government controls on the mining industry -- including the removal of the golden share.

Analysts say it would make sense for the government to get rid of the share if it wants to benefit from a sale of some of its remaining 20 percent share in Ashanti, as Finance Minister Yaw Osafo-Maafo suggested it might in May.

Ashanti said that removing the golden share would allow it to join industry consolidatation, which is being hastened by weak gold prices.

"Consolidation is the direction we'd like to go, but it'll have to come with the appropriate combination of factors, not least of which is the question of the company's independence," said Anaman. "We're in a situation of 'eat or be eaten'."

Ashanti was established more than a century ago and operated only the Obuasi mine until it bought up other mines in Ghana, Zimbabwe, Guinea and Tanzania over the past decade.

Lonmin said in May that it had no plans to increase its stake in Ashanti and wanted to sell its 32 percent holding when the time was right.