Ghana Chamber of Mines, an association of mining companies operating the country has once again opened up its members to its stakeholders to update them on the current state of the industry.
Speaking at the 2016 Mining for Development Forum (MDF) which was attended by the representatives of the Ministry of Lands and Natural Resources, Ghana Revenue Authority, Office of the Administrator of Stool Lands, Ghana Statistical Service, among others, the Chief Executive Officer of the Ghana Chamber of Mines, Sulemanu Koney said the forum is aimed at providing more information on the mining cost metrics to the stakeholders.
He stated that: “the Chamber of Mines decided to organize this event with the objective of clarifying these metrics which are cash costs, total cash costs, and the currently popular all-in sustaining costs, laying out what they all actually mean in practice”.
Given the importance of cost in the mining industry, there is the need for all the stakeholders to have a common understanding of definition and metrics of cost in the sector. Although most businesses will refer to concepts such as fixed and variable costs, the mining industry has adopted the set of metrics which reflect the unique nature of the sector, Mr Koney stressed.
Taking the participants through the mining cost metrics in Accra, the Acting Vice President and Head of Finance, Gold Fields West Africa, Augustine Wireko Asubonteng identified some of the challenges associated with the all-in-sustaining and the all-in-costs.
According to him, all-in-sustaining and the all-in-costs still excluded income tax, working Capital (Except for Gold Inventory adjustments on sales basis), all Financing charges (Including capitalised interest), and Cost related to business combination, asset acquisition & disposal.
Until recently, the cash cost has been the primary cost reference metric reported by the gold mining industry to its publics particularly its investor community. He said the pervasive reporting by the industry of this metric created the incorrect perception that it reflected the total cost of gold production.
“Reporting on this metric unwittingly gave some interested parties the impression that mining companies were neck deep in the money. In other words they were creaming off tidy margins”.
Whilst cash costs allow comparability in the global gold mining industry and enable investors to make informed decisions, it was clearly an inadequate and incomprehensive measure of the cost of gold production.
Not surprisingly, in 2012, the World Gold Council, a market development organization for the gold industry developed other metrics such as all-in-sustaining and the all-in-cost to reflect the cost of mining gold on a sustaining bases as well as the total cost of production. These metrics had been widely accepted in the gold mining industry and the chamber on its part commenced reporting on these metrics in 2013.
The workshop was chaired by the Vice Chancellor of the University of Mines and Technology (UMaT), Prof. Jerry Samuel Yaw Kuma.