Gold mining company AngloGold Ashanti has resorted to international arbitration to resolve the worsening illegal mining incursion at the Obuasi gold mine, in Ghana, where underground mining has been stalled to allow for lower-cost redevelopment.

The company, headed by CEO Srinivasan Venkatakrishnan (Venkat), stated in a stock exchange announcement that its Ghanaian subsidiary had been forced to invoke its mining lease dispute reso- lution provisions at Obuasi, where the security situation continued to deteriorate.

Owing to the failure of Ghanaian authorities to restore law and order at the mine, an arbitration case had been registered with the International Centre for Settlement of Investment Disputes, an international arbitration institution headquartered in Washington, in the US, which facilitated dispute resolution between international investors and host States.

The Ghanaian attorney-general had been notified of the commencement of arbitration proceedings, which came against the backdrop of AngloGold Ashanti Ghana being forced to declare force majeure following the incursion of hundreds of illegal miners inside the fenced area of the mine site.

In the statement, the Johan-nesburg- and New York-listed mining major referred to “increasing lawlessness, trespassing, property damage and threats to employee safety”, which might force it to withdraw all essential site personnel, including those operating the mine’s critical underground water pumps.

AngloGold Ashanti Ghana suspended underground mining operations at Obuasi at the end of 2014, after incurring heavy and ultimately unaffordable financial losses over several years.

In February, AngloGold Ashanti executive VP Graham Ehm flashed a tenement map onto a large screen at the company’s presentation of results in Johannesburg to illustrate that, at that stage, illegal mining was only taking place at the small northern extremity of the tenement – a situation that had changed radically, with illegal miners now in underground tunnels and areas hosting key infrastructure within the mine area itself.

The worsened situation had taken place after AngloGold Ashanti had agreed to cut the size of its tenement by 60% to accommodate illegal mining, which had been causing considerable disruption across Ghana.

In early 2013, the spread of illegal mining prompted the Ghanaian government to implement a programme to remove the so-called galamsey tenements across the country, including at Obuasi.

Through the Chamber of Mines, the Ghanaian mining industry entered into an agreement with the government to provide ongoing security support to supplement mining company efforts to secure property and mining leases.

But after supplementary security forces withdrew, AngloGold Ashanti communications manager John ‘Big John’ Owusu was fatally injured on February 6 after being hit by a retreating vehicle that had been confronted by an aggressive mob.

As a consequence, AngloGold Ashanti removed all noncritical staff from the mine while keeping government stakeholders updated and engaging with the authorities at the highest levels for the re-estab- lishment of law and order and the removal of illegal miners from the site.

At the same time, the company continued with its feasibility to redevelop Obuasi.

As reported in Mining Weekly in April, Ghana Chamber of Mines external relations and communications director Ahmed Nantogmah expressed the view that enforcement of the new Minerals and Mining Amendment Act would do much to reduce the onslaught of illegal miners on mining concessions in Ghana.

The Act, which was passed in 2015, prohibits every form of illegal mining and criminalises mining without a licence. It also mandates the judiciary to confiscate the equipment used in illegal mining, along with the products of such activities.

Ghana country manager of SRK Consulting, a multidisciplinary firm of consulting engineers and scientists, was quoted in the same Mining Weekly report as saying that the impact of illegal mining activities had been worsened by increased access to heavy machinery.

While the galamseys had traditionally been artisanal, increased mechanisation had boosted their production rate and the extent of the environmental damage, owing to their activities, impacting on rivers and forests especially.

He expressed the view that law enforcement agencies had not yet been effective in enforcing regulations.

Australian gold explorer, developer and producer Perseus Mining CEO Jeff Quartermaine was quoted in Mining Weekly as stating that neighbouring West African country Côte d’Ivoire had created an investment environment that was more attractive to foreign capital than Ghana.

He explained that this had not always been the case and that, in 2011, when Perseus established its Edikan mine on the Ashanti gold belt of Ghana, the country had an international reputation as one of the most attractive destinations for gold mining investment.

Progressively, that reputation had diminished and Côte d’Ivoire was certainly a beneficiary of this change.

Quartermaine said modern galamseys were highly organised and well equipped, and were allowed to continue unchecked by some of those who were empowered to prevent illegal activities.

AngloGold said that, despite the difficult global mining environment, it had continued to invest significant time, skills and financial resources in building the case for Obuasi’s redevelopment into a much- needed long-term contributor to the local, regional and national economies.