Heart of gold
Mining has come a long way from the old image of human and environmental desolation. Scott Santti explains to Gay Sutton how Newmont Ghana Gold has placed social sustainability at the heart of its operations.
The Newmont Mining Corporation is one of the worldÔÇÖs largest gold producing companies. With operations in the US, Canada, Mexico, Peru, Bolivia, Australia, New Zealand, Indonesia and Ghana, it has a portfolio of approximately 38,840 square miles of property and proven and probable gold reserves across all these regions totalling approximately 85 million ounces.
Based in Denver, Colorado, Newmont is quoted on the S&P 500 Index and Fortune 500, but perhaps more significantly was the first gold mining company to be included on the Dow Jones Sustainability World IndexÔÇöa league table that companies have to be invited to make a submission for. The annually published index, which Newmont joined in 2007, represents those who are judged to be world leaders in terms of economic, environmental and social sustainability.
NewmontÔÇÖs interests in Africa began in 2002, with the acquisition of AustraliaÔÇÖs largest gold company, Normandy Mining, a deal which brought two fairly advanced exploration projects into NewmontÔÇÖs portfolio: the Ahafo project, which is located in the Brong Ahafo region of Ghana, and the Akyem project, located in the Birim North District of the eastern region of the country. Together, these projects represent some 20 per cent of the companyÔÇÖs core assets worldwide.
Having formed Newmont Ghana Gold Limited (NGGL) to manage the African operations, the company continued with a policy of exploration at both sites until late 2005. ÔÇ£The decision was then made to halt the development of Akyem and concentrate on Ahafo,ÔÇØ explains general manager Scott Santti. ÔÇ£I believe it was one of the best decisions weÔÇÖve made, because managing two projects concurrently in what was essentially a new region for Newmont was pretty aggressive.ÔÇØ
This left Santti and his team with the resources and time to concentrate on building the mine; to develop suitable mining and milling techniques for the conditions at Ahafo; to learn how to communicate and work with the national regulatory bodies; and to develop good relationships with the local people. ┬á
One of the greatest early challenges of the project was to build trust and cooperation with the local community. The ore deposit lay directly beneath an area that was inhabited by around 1,700 traditional households from the towns of Ntotroso to the north-east of the mine and Kenyase to the south-west.┬á
In line with the Newmont CorporationÔÇÖs policy of developing environmentally and socially sustainable businesses around the world and supporting the local communities in which it operates, NGGL began by initiating a proactive stakeholder engagement approach. This involved creating a range of policies and procedures to resettle those affected and to compensate them for losses caused by the development.
A Livelihood Enhancement and Empowerment programme, or LEEP, was set up, with the ultimate goal of improving livelihood security and the quality of life for the almost 10,000 men, women and children who would be directly affected through resettlement and relocation due to mine construction.
A resettlement negotiation committee was convened to thrash out plans for land access; meanwhile, dialogue was established with the community through a number of approaches. Community information centres were set up in both the major towns and several of the smaller ones to provide access to information and a channel for communication. Community relations and liaison officers were appointed to work closely with both communities, meeting regularly with traditional leaders, local government and even with youth associations, the media and farmersÔÇÖ associations. The company also set up a womenÔÇÖs consultative committee of elected female representatives from the communities. ÔÇ£We did this to provide a gender balance in information flow and consultation,ÔÇØ Santti explains, ÔÇ£and ultimately to empower women to take part in the development of their community, and in decision making with regard to mine activities.ÔÇØ┬á
These community relations initiatives have been strengthened and further developed since the relocation exercise. But at the time, they played a key role in enabling the company to manage the changes in a way that benefitted the community. New homes and schools were provided for the affected families, while local farmers displaced by the mine were presented with the titles to land they previously had not been allowed to own, and were supported in their farming methods. More than 95 per cent of farmers are farming again, using improved planting and harvesting methods that are resulting in higher crop yields. ÔÇ£We wanted to be a welcome guest and addition to the host communities within whose environment we operate,ÔÇØ Santti says.┬á
LEEP also trains beneficiaries in small animal production, soap making, batik, tie and dye, vegetable and mushroom production, snail rearing and construction of household storage structures, with the aim of helping to build sustainable capacity that is not entirely dependent on NGGL operations. Another programme, the Ahafo Linkages Program, has raised the capacity of local businesses to be able to offer services and goods to the mine. As of 2009, more than $10 million worth of business was done with more than 300 local Ahafo businesses.
The whole process has been overseen by a formal Social Responsibility Forum, which is facilitated by an independent moderator and made up of representation from regional and district government; NGGL itself; members of parliament; traditional leaders; youth, women and farmers of host communities; and NGOs. The Forum has developed three formal agreements between NGGL and the host communities, the first of which is a Social Responsibility Agreement (SRA).
This outlines the terms of the relationship between NGGL and stakeholdersÔÇönamely, that it should be open and transparent in process and positive and mutually beneficial in outcomes. Furthermore, the SRA has formed the basis for an agreed development foundation, the Newmont Ahafo Development Foundation (NADeF), into which the Ahafo Mine has committed $1 per ounce of gold produced and one per cent of net profit. As of December 31 2009, the accumulated commitment into NADeF was over $4.3 million.
An Employment Agreement was also created, with the ultimate goal of 35 per cent of the national workforce of the Ahafo Mine being people from the local host communities, with a goal of increasing that to 50 per cent over the next 10 years.
However, there have been some considerable obstacles to overcome. ÔÇ£When we arrived here, there had previously been only a small amount mining in the area, so the people had not been exposed to mining. Consequently, they saw the mine as a big opportunity for jobs.
ÔÇ£During the construction phase, of course, there were indeed plenty of jobs. But once construction ceased, those jobs disappeared. So there have been some learning pains.ÔÇØ However, true to the Employment Agreement created through the Social Responsibility Forum, NGGL today directly employs just over 1,500 staff at the mine, and a further 2,000 are employed by contractors. ÔÇ£Of the total of 3,500 staff, over 30 per cent are local people, so we are doing our best to fulfil our commitment.ÔÇØ
Jobs in the mining environment are, however, skilled; and considerable investment has gone into training in all areas of the business. For example, the company runs a mine equipment operator training programme. One hundred and thirty local people with no prior experience have so far completed the training and gained full time employment at the mine. A further 40 inexperienced people have also been trained in process operating skills and are now employed at various skills levels in the processing plant.
ÔÇ£We also run a programme with the schools to hire as many young people as we are able to provide positions for,ÔÇØ Santti affirms. Nineteen young people straight from school have so far completed a three-year apprenticeship programme in process maintenance and are now working at Ahafo, while 42 more are in the process of completing a four-year mine maintenance apprenticeship.┬á
ÔÇ£One of the challenges we have faced with employing from the community is that their knowledge of the health and safety and the environmental hazards of the industry is very limited,ÔÇØ Santti comments. ÔÇ£So weÔÇÖve been working to instil a culture of safety and environmental awareness, and itÔÇÖs something we will continue working on. We have, for example, introduced a bonus scheme to focus attention on safety and environmental awareness, and this also rewards increases in productivity.ÔÇØ
Developing the mine from a greenfield site to full production has required an investment of around $800 million. Part of the cost has gone on land acquisition, exploration, feasibility studies and environmental management. The rest has been spent on constructing and equipping the usual mine structures such as the mill, dewatering facilities and tails dam, with processing infrastructure having been provided by Metso, Cat and Sandvik, among others. There is also a site and administrative offices, as well as a village for senior staff.┬á
Mining operations commenced at Ahafo in January 2006 and commercial milling began in July that year. Today, around 56 million tonnes of ore is mined annually from three open pits at the southern end of the Ahafo property: the Subika pit, the Apensu pit and the Awonsu pit.┬á Together they produce around 0.5 million ounces of gold a year and the company believes the three pits will be able to sustain this rate for the next few years. The total reserves for the Ahafo concession, as of December 2008, stood at 9.3 million ounces of gold contained in 11 pits.
NGGL is now focusing on developing some of these further pits. ÔÇ£We are in the process of developing a fourth open pit mine called Amoma, about nine kilometres north of our existing operations. This is scheduled to begin producing in the fourth quarter of this year,ÔÇØ Santti says. When Amoma begins production, approximately 50 per cent of the ore processed at the Ahafo mill will be mined from Subika, 25 per cent will come from Awonsu, 15 per cent from Apensu, with Amoma contributing five per cent.
Exploration has continued throughout the companyÔÇÖs time in Ghana, and is likely to be a strong focus in the future. ÔÇ£We are just beginning an exploration decline from the bottom of our Subika pit to verify the feasibility of underground mining in the area,ÔÇØ Santti reveals. ÔÇ£If it proves suitable it will be our first in the country.ÔÇØ The company is also engaged in exploration some 20 kilometres north of the new Amoma pit where it holds mining leases. The aim is to establish whether there is the potential for a further pit which would extend the life of the existing operations.
Over the four years since mining began at Ahafo, the company has worked to optimise its mining methods. For example, work has been done to improve the sampling methodology and ore control. Mining software has been optimised, the most effective bench heights have been identified and the optimum speed at which mining can take place has been calculated.┬á All of these things are dictated by the geology and characteristics of the local area. In a similar way, the mill and processing plant have been examined in detail so that the footprint, equipment configuration and processes can be optimised to achieve the most efficient throughput.
The geology at Ahafo also has other distinct advantages. In many mining operations, obtaining high quality fresh water and disposing of wastewater are considerable challenges.┬á The water that is pumped from the pits at Ahafo is of good quality and can be stored in a clean-water reservoir for use later at the plant. ÔÇ£We donÔÇÖt have whatÔÇÖs called acid mine drainage, neither do we produce acid-generating waste material. And again, this is due to the geology of the region,ÔÇØ Santti explains. ÔÇ£The rocks do not contain sulphides and carbonaceous materials; in fact, our leach tests show us that nothing leaches out of these rocks. IÔÇÖve worked in many other mines, and this is a much nicer place to work.ÔÇØ
Having successfully commissioned its Process Plant Cyanide Recovery Project, the mine is also in compliance with the International Cyanide Management Code, demonstrating world class standard and best practice in this area of its operations.
The lessons learned from this first mining experience in Ghana are very valuable, and NGGL aims to apply that knowledge to future operations in the country. Having established Ahafo as an efficient and successful mining operation, the corporate strategy is shifting towards expansion. Last year, the time was judged to be right to resurrect the Akyem project.┬á Environmental permits had been granted after several years of stringent environmental impact studies, public consultations and independent reviews. During 2009, exploration work was ramped up at the site; and a feasibility study is now underway, to examine the viability of mining the gold deposits in the area.
ÔÇ£WeÔÇÖre hoping to be able to make an investment decision later this year based on the result of these studies,ÔÇØ Santti comments. If Akyem gets the go-ahead, then because the geology is so similar to that of Ahafo, the optimised methodologies and processes that have been systematically defined at the first mining location can be introduced immediately at the new site. ÔÇ£As a result, we hope to be more effective in our capital spend at Akyem. Our mining and processing methodologies will already be largely optimised, and we intend to partner with our contractors in a slightly different way, to optimise what we get upfront.ÔÇØ
The mining operations in Ghana are heavily dependent on obtaining a reliable source of power, and this is an issue that affects all companies working in the country. In partnership with three other gold mining companies operating in GhanaÔÇöGoldfields Ghana, AngloGold Ashanti and Golden Star ResourcesÔÇöNGGL has contributed towards the construction of an 80 megawatt diesel powered generation facility, which links to the grid and provides credit towards power for the partner companies should Ghana undergo any future power shortages.
NGGL has learned a great deal during its first eight years in Ghana. ÔÇ£From a business perspective, we have learned how to better do business within the Ghanaian culture,ÔÇØ Santti concludes. ÔÇ£And this should help us continue to improve our relationships with the local communities and the regulatory authorities.ÔÇØ
This ingrained focus on environmental and social sustainability demonstrates exactly why the company was chosen to be the first gold mining organisation to gain a place on the Dow Jones Sustainability World Index.