“Effective cost management leads to profitability and increase investment,” he said at the GCM Mining for Development Forum in Accra on Wednesday.
The Forum organised by the GCM on the theme “Mining Cost Metrics,” was to discuss with stakeholders in the industry such as Ghana Revenue Authority, National Development Planning Commission, Civil Society and the Media, the rising cost involved in mining gold in Ghana.
The Mining industry in Ghana in recent times went under real difficulties due to the country’s energy crisis and the fall of gold price on the world market.
Gold prices which plummeted below $500 late last year is currently pegged around $1,240 on the world market.
Mr Koney said mining companies had no control over the price of gold and therefore, must to take the issues of cost control seriously in order to maximise profit.
.He said mining was critical and its contribution to the country’s economy could not be underestimated, stating that mining contributes immensely to the government tax revenue.
The Acting Vice President of Gold Fields West Africa, Augustine Wireko Asubonteng who did a presentation on the cost buildup in mining gold in Ghana dismissed the perception that the mining companies in Ghana were reaping abnormal profit.
“The mining industry is going through tough times and it is not as easy as people see it,” he said.
Mr Asubonteng, who is also the Finance Director of West Africa Region, explained that the high cost in mining eats up a huge chunk of the profit of the mining companies.
He said it cost more than $1000 to mine and process for an ounce of gold, and said the cost included high cost of capital, rising input cost, exploration, fuel, procurement and maintenance of mining equipment, energy, labour, royalty and management of mining waste.
Mr Asubonteng, for instance, said Gold Fields spent more than $150 million dollars every month on fuel on its Tarkwa operations alone.
In addition, the Acting Vice President said aside the high cost in processing gold; the mining companies had to invest additional capital to sustain a mine.
Mr Asubonteng disclosed that the Gold Fields Ghana had developed a new cost metrics to account for the various cost by the company.
The new cost metrics, he said had inputted about the 95 per cent of the cost incurred by the company in its operations in order to arrive at the true cost of mining and processing for an ounce of gold.
Mr Asubonteng called for a friendly tax regime to attract more capital and investment in the mining industry.
Professor J.S Kumah, the Vice Chancellor of the University of Mines and Technology in Tarkwa who chaired the programme commended the GCM for the workshop.
Such programme, he said, were very important to dilate on the challenges facing the mining companies to help government develop effective policies to spurt the growth of the mining industry.
By Kingsley Asare