The Ghana Chamber of Mines said on Friday the prospects for the industry this year were good with major companies poised to increase their output but there were fears that the energy constraints would undermine efforts to achieve this goal.
“The price of gold is expected to be firm and overall production in 2007 is not expected to be hampered by extraneous factors. On the other hand production costs are expected to rise mainly on account of the relatively high cost the mining companies incur in generating power,” Mr Jurgen Eijgendaal, President of the Chamber told the 79th AGM of members in Accra.
Mr Eijgendaal said with the high price of diesel, some mining companies were spending about two million dollars a month on the average to generate additional power and companies which did not have adequate self-generating capacity had to resort to batch processing to meet the 25 percent cut in power consumption.
Currently, the mining industry spends 8.6 million dollars a month to produce electric power to make up for the shortfall from the national grid.
Mr Eijgendaal said the implications of the power supply situation last year were quite dire for both companies and government.
“This unplanned and increased cost adversely affected the profitability of the mining companies and reduced the corporate tax that they were expected to pay to government.”
Whilst the expected amount of mineral royalties that mining companies projected to pay might not be seriously affected by the power crisis, the inability of some mines to produce on a continuous basis would reduce their output compared to planned production.
He said to avert the negative impact of the power supply on its operations, the mining industry adopted a two-prong strategy to address both the short-term and medium-term strategy.
To address the short-term shortfall, the industry underwrote the cost of transporting Volta River Authority's rotor from the United Kingdom, where it had been sent for repairs to Aboadze to the tune of 504,300 dollars.
In the medium-term Gold Fields, AngloGold Ashanti, Newmont and Golden Star Resources had acquired an 80 mega watts power generating plant to meet the 25 per cent shortfall in their power requirements.
Mr. Eijgendaal said the consortium would pass on the plant to the VRA at no cost after a year's operations.
The Annual General Meeting was held on the theme: “Mining and the Development of Ghana; Past, Present and Future.”