Ghana’s Parliament last month ratified a merger between South African mining giant, AngloGold, and Ghanian enterprise Ashanti Goldfields, to create the world’s largest gold mining business.
However, instead of jubilation, the event was marked by a veiled boycott by Ghana’s biggest opposition party, the National Democratic Congress (NDC), which had expressed reservations about the merger since negotiations began.
The approval for the merger, which will see the merged entities form a company called AngloGold Ashanti, was given in a voice vote, which the NDC opposed, saying it should have been a head count.
The NDC argued that an international agreement of that nature required not less than two-thirds of members of the House to ratify it.
But the parliament speaker stood his ground on the voice vote, and Ghana signed the agreement.
The run-up to the February 18 parliamentary approval saw a bitter battle between two South African mining companies, AngloGold and Randgold.
AngloGold offered $1,4-billion for the merger, increasing it’s original offer of 1,1-billion cedis, against Randgold’s offer of $1,7-billion. But AngloGold had been a clear favourite from the beginning because of other factors and its choice was no surprise to those in the industry.
The government had said Ashanti Goldfields Company would have access to AngloGold’s financial resources and expertise. The Obuasi mine in central Ghana, one of the richest in the world, for example, needs long-term capital to meet its challenges.
The NDC, which sold about 30% of government shares in Ashanti Goldfields to the public when it was in power in 1994, had repeatedly warned that the merger of the two companies could have major consequences for the nation.
To the NDC, the proposed merger was undervalued considering its current assets and potential for deep mining.
In 1999, Lomin, a major shareholder of Ashanti Goldfields Company, offered $800-million for a similar merger, but the NDC, which was in government at the time, refused.
The government originally owned some 17,5% of shares in Ashanti Goldfields valued at $222-million. Now its number of shares has shrunk to 2,4%.
But under AngloGold Ashanti, the government would have an additional 2 685 000 shares valued at $100-million, bringing the government’s share in the company to 3,4%.
Despite the muted response in Ghana to the AngloGold Ashanti merger, industry sources speak of important advantages to Ghana.
The new company would have global assets of 22 mines in 11 countries including Ghana, South Africa, Guinea and Australia. The company would be listed on several stock exchanges including London, New York, Johannesburg, Canada and Ghana.
”It will achieve an unrivalled degree of geographic ore body diversification as well as the capacity to weather both gold price and currency volatility,” sources said.
”The new company will also have an enviable organic growth pipeline and be a significant cash generator for the benefit of all its stakeholders,” the sources added.
The government has hailed the deal as one of the biggest investments Ghana has ever attracted and hopes that it brings new and significant investment into the country. – Sapa-DPA