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30.10.2003 Business & Finance

Ex-Mines Minister Supports Anglo-Ashanti Merger

By Graphic
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Mr Fred Ohene-Kena, Minister of Mines and Energy in the erstwhile National Democratic Congress (NDC) government, has described the government’s decision for the merger between Anglogold and Ashanti Goldfields Company (AGC) as a wise one in the national interest.

He said that bold decision would provide the AGC with the money it needed for the kind of investments it required to make the Obuasi mine more profitable.

In an interview in Accra yesterday, Mr Ohene-Kena, a mining engineer, noted that the sentimental attachment to the whole issue was unfounded because before the decision to merge, the country really did not have any substantive shares in the AGC. He, however, pointed out that the government was slow in taking the decision.

He stressed that this decision should have been taken in the boardroom or by the shareholders, instead of allowing it to appear as a sole prerogative of the government. He said since 1998, the AGC had been looking out for the opportunity to expand but lack of financial facilities hampered that initiative.

In 1999, he said, Lomin sought a merger with the AGC, but this was refused because the AGC was entangled with hedging problems which would not have given it the competitive edge it now had. “The AGC wanted to put itself in the position where a bigger entity would not buy it outright, so it embarked on its expansion strategies which will give it the opportunity to go into a merger that will bring viable economic returns, not only to the company but also to the country as a whole,” he said.

This, Mr Ohene-Kena stressed, was what had been realised with the decision to merge with Anglogold.

Mr Ohene-Kena observed that a critical look at Anglogold’s proposals and its strategic commitment put the AGC in a position where it could realise its long term dream. He said the AGC’s plans to explore the deep rocks for gold called for such an expertise which Anglo has judging from its liquidity and technical expertise for deep mining.

He said the AGC remained, in principle, a Ghanaian property, since the mine is not relocating to South Africa or elsewhere. He said although Randgold flexed its muscles wide enough, it did not have the liquidity and technical expertise to meet the AGC desire for expansion.

Randgold’s, only known mining experience, he said, is with a Malian mine, where it owns only 40 per cent. He said the AGC could not depend on that for serious business. He added that while Anglo was holding the physical liquidity to invest in the AGC, Randgold was waiting for a merger whose returns it would in turn use for expansion. He said a choice between these two alternatives was definitely going to go in Anglogold’s favour.

Mr Ohene-Kena also observed that the Parliamentary approval being called for was completely unnecessary since that would further delay the process of merger.

He explained that since the AGC was already on the stock exchange, the provision of the companies code must be followed in any merger or take-over. He said, anything to the contrary would send wrong signals to the investor community that “we are not prepared to observe the rules of the game”.

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