The Ghana Trades Union Congress (TUC) has declared its intention to force Goldfields Ghana Limited to halt its redundancy exercise that would affect over 2,000 workers, describing the plan as “horrifying.”
In a statement issued after its second bi-annual General Council meeting in Accra which was dominated by discussions about the developments in Goldfields, the TUC declared its full support for the court action initiated by the Ghana Mineworkers Union against Goldfields with the aim of halting the redundancy exercise.
“In the coming days and weeks, we would pursue additional measures to ensure that Gold Fields does not renege on its contractual obligations and does not further compound the looming unemployment challenge we face,” the statement said.
The statement, signed by Dr. Yaw Baah, Secretary General of TUC noted that given the already precarious employment situation, “the TUC and its affiliate national unions were horrified by the news that a company that has gained so much from the very generous fiscal incentives made available by the our mining laws and have consistently recorded colossal profit margins over the years, could contemplate such heartless measures.”
The facts available to the TUC indicate that Gold Fields intends to pursue a contract mining model.
“The initial estimate of the company was that this alternative mining option would lead to the retrenchment of about 1,500 of its employees.
But the latest number of workers cited in a letter written by lawyers of Gold Fields Ghana Limited astonishingly puts the expected number of affected workers at 2,150, out of a total workforce of 2,516 (including Management staff).
“We find this extremely unfortunate considering the extent of contradictions,” the statement said.
Goldfields justified the decision to undertake contract mining and the retrenchment on two grounds.
One was the Life of Mine. Goldfields claimed that the lifespan of the Tarkwa mine stands between five and six years. But according to the TUC, this claim is misleading as a result of a report on the Goldfields website which stated that the life span, as at December 2016, of the mine stood at 15 and 14 years.
The second claim was that of an ageing fleet. According to Goldfields, its mining equipment is ageing and nearing its operational lifespan. Yet an analysis by TUC showed that over 80 percent of the current fleet is operating below the Original Equipment Manufacturer Life of 60,000 hours and an Extended Life of 72,000 hours. This means that the current fleet can run for several years.
The proposed retrenchment by Gold Fields is, therefore, a demonstration of bad faith and is in breach of the Mining Development Agreement the Company signed with the Government of Ghana in 2016.
As part of that Development Agreement the Company signed with the government of Ghana on March 11, 2016 and ratified by Parliament on March 17, 2016, the government of Ghana committed to grant further fiscal incentives provided under the mining lease held by Goldfields. Specifically, Government agreed to reduce the corporate tax rate, which stood at 35 percent for all mining companies to 32.5 percent for Gold Fields Ghana Limited, under the development agreement. The royalty was also reduced from a flat rate of five percent to a range of between 3 to 5 percent, indexed to gold price spanning 11 years.
According to Goldfields, these and other fiscal concessions would save the Company up to USD33 million a year effective 2016.
The government of gave away these incentives principally because Section 49 of the Minerals and Mining allows the state to enter into Development Agreement with holders of Mining Leases where the proposed investment exceeds US$500 million.
Gold Fields Ghana Limited had a mining lease and had also promised/proposed to invest additional USD2.5 billion in both the Tarkwa and Damang Mines. It was envisaged that the new investment would increase gold production at the two mines by 40 percent to one million ounces per year.
“The TUC calls on government to ensure that Gold Fields implements its side of the Development Agreement and refrain from adducing additional arguments to justify what is basically an unjustifiable action
“We would like to assure our members at Gold Fields that the Union will do the best it can to defend their rights,” it said.
By ADR Daily Newsdesk