TORONTO(miningweekly.com) – Newmont Mining Corp is is hopeful that powersupply to its Ahafo mine, in Ghana, will continue without significantdisruptions this year, and is also cautiously optimistic about thelonger-term supply outlook in the country, senior executives said inNew York on Monday.
The firm has delayed a decision on building a second mine – Akyem – in large part because of uncertainty over energy security.
Secure power is “one of the key linchpins” to Akyem moving forward, operations vice-president Brian Hill said in a presentation during the group's investor day, broadcast over the Internet.
At present, Ahafo receives power from the Volta River Authority, ahydropower utility, and also has the option to run higher-cost dieselback-up generators during power disruptions, generally caused by lowwater levels.
So far this year, however, Newmont employees onthe ground report that the water levels in the Volta reservoir are attheir highest in several years, which may remove the threat ofsignificant power disruptions for the remainder of 2009, Hill said.
In 2007, Newmont teamed up with three other miners in the country tobuild an 80 MW power plant that started commercial operations last year.
Altogether, the current hydropower system also looks like it will be in“pretty good shape” for the short term, vice president for development Guy Lansdowne agreed.
Looking further ahead, there is also growing cause for optimism, withthe Ghanaian government working on expanding the hydropower supply,plus the potential for gas coming from Nigeria, as well as from a newoffshore oil and gas discovery.
Gas is already being broughtinto the country through the West African pipeline, from Nigeria, butit is free flowing and will require compressors before it can be usedto fire diesel-oil fired plants, which would substantially reduce thecost of operating the facilities, Lansdowne said.
The Ghanaiangovernment is also keen to see offshore oil and gas discoveriesdeveloped, which could likely begin to play a role in the nation'senergy mix within three or five years, he estimated.
“But that would certainly go a long way to mitigating some of the issues that the country does have with power supply.”
With “good headway” being made on the power question, Newmont willcontinue to evaluate the Akyem project, and is also hoping that thechanging market conditions will enable it to reduce operating andcapital costs from previous estimates.
“We have a permit, wehave procured the bulk of our major equipment, the bulk of ourengineering work is done, and it is really the power that we want tofocus on here,” Lansdowne remarked.
Newmont has also met withnew officials at various levels of the new government, since nationalelections were held in December, said CEO Richard O'Brien.
“Longer term, we feel good about the power supply in Ghana. And longer term we feel very good about the democracy in Ghana.”
Newmont sold 521 000 oz of gold from the Ahafo mine in 2008, at a costof $408/oz. Output is expected to be flat to slightly lower this year.
The firm is also evaluating the potential of an underground mine – dubbed Subika – at Ahafo.
Edited by: Liezel Hill