Monday, September 18, 2017

Gold production at Bulyanhulu mine to be slashed by over half

Bulyanhulu Mine officials and other employees

Bulyanhulu Mine officials and other employees cut a cake during a function to bid farewell to  2,000  laid-off workers on Saturday. PHOTO | REHEMA MATOWO 

By Rehema Matowo @TheCitizenTz

Geita. Gold production at Bulyanhulu mine will be almost halved when an alternative method of processing the precious metal is adopted at the facility.

Acacia Mining general manager Asa Mwaipopo said on Saturday that the mine would start to use cyanide to process gold following the government’s ban on exports of metallic concentrate.

Mr Mwaipopo made the revelation during a function organised to bid farewell to about 2,000 workers who have been laid off at Bulyanhulu mine as part of Acacia’s cost-cutting drive. He said that even by using cyanide, production at the mine would not return to the levels seen before the concentrate ban was imposed in March.

“We are planning to install a machine, which will enable us to process metallic concentrate by using cyanide. However, gold production will be less than half of the output before the ban,” Mr Mwaipopo said.

He added that the sum the company paid Kahama District Council would also go down significantly.

Of the 2,000 workers laid off by Acacia Mining, 1,200 were directly employed at Bulaynhulu mine.

Mr Mwaipopo said the mine would remain with 150 workers, with as many being employed indirectly.

Bulyanhulu mine would continue to implement its corporate social responsibility programmes in Msalala, Kahama and Nyangw’ale despite scaling down operations, he added.

Speaking during the ceremony, the Tanzania Mines, Energy, Construction and Allied Workers Union (Tamico) representative at Bulyanhulu, Mr Kazimil Lubigisa, said Tamico had been saddened by the decision to lay workers off.

The event also saw Acacia bid farewell to Bulyamhulu Gold Mine general manager Graham Crew, whose tenure of service has ended.

Mr Crew said Acacia was left with no other option than to cut operational costs following the government’s decision to ban the export of concentrate.

Acacia Mining intends to reduce operational activities at Bulyanhulu due to a $15 million (about Sh33 billion) mismatch between expenditure and income in a month, the company said earlier this month.

“The impact of the ban, in addition to the deterioration of the current operating environment, has led to negative cash flow of approximately $15 million per month at the mine and thus has made ordinary course operations at Bulyanhulu unsustainable,” the firm said in a statement.

It added that the decision to scale down operations and reduce expenditure at the mine was meant to preserve the long-term viability of its business.

“This programme will include the preservation of all assets and equipment to enable the mine to resume ordinary course operations should the export ban be lifted and the operating environment stabilised.”

Since the gold/copper concentrate export ban was imposed on March 3, the company has seen a build-up of approximately $265 million worth of concentrate inventory in Tanzania.

The firm said it had taken a number of measures to reduce operating and capital costs in order to protect jobs and its supplier base, both of which are predominantly Tanzanian. “Despite these actions, the loss of revenue, together with an outflow of approximately $65 million of indirect taxes and costs from other changes to the operating environment, has led to a significant cash outflow of approximately $210 million in 2017 to date,” the company said. Acacia further said it supported the ongoing negotiations between the government and Barrick Corporation, noting that it still believes that a negotiated resolution was the best outcome for all stakeholders.

The miner plans to halt the processing of underground ore within four weeks at Bulyanhulu

“The retreatment of tailings, which is currently suspended to preserve water in light of the on-going drought conditions in northern Tanzania, is expected to recommence in October, assuming adequate rainfall is received, and will continue at a rate of 30-35,000 ounces per annum whilst underground activity is ceased.”

Without revealing the actual number of people who will be affected in the exercise, Acacia said in implementing the programme, it would significantly reduce the number of employees from its Bulyanhulu mine.

The programme – to be completed in three months – seeks to cut one-off costs of between $20 million and $25 million and the natural unwinding of around two months’ worth of working capital, translating into about between $35 million and $40 million.

However, Acacia’s Buzwagi mine, which has also been affected by the ban, will continue to operate as usual.

“This is due to its remaining short mine life and lower impact of the changes in the operating environment on the company’s cash outflows….the mine has commenced a trial to test whether it is cash flow positive in light of the current export ban.”

This, according to Acacia, would mean a reduction in overall gold and silver recoveries and the mine would no longer recover the contained copper, but would enable it to sell all the gold and silver it produces rather than only 35 per cent of production.

Ultimately, the company said, the move would put the company on the right footing to end gold/copper concentrate production from mid-2018.

President John Magufuli has advised miners to build gold smelters in the country, saying this would create jobs and boost revenue from mining.