Johannesburg - AngloGold Ashanti would make “significant” changes to its Obuasi mine in Ghana that might include job cuts, chairman Tito Mboweni said.

The company’s problems at the mine included labour laws that made it difficult to fire workers, outdated work practices and illegal miners, Mboweni said in a television interview at the World Economic Forum in Davos yesterday.

“We need to do something significant to get our operations at Obuasi going,” he said. “It’s not simply about cutting 400 jobs. It’s not simply about work reorganisation. It is about confronting the whole ecosystem.”

Production at Obuasi, an underground mine that is as deep as 1.5km, dropped 30 percent to 58 000 ounces in the second quarter of last year compared with the same period in 2012. Falling output at mines such as Obuasi and a gold price that dropped 28 percent last year have forced AngloGold to cut spending, exploration, jobs and its dividend.

“The challenges at Obuasi are enormous and coupled with some very tough labour laws in Ghana,” Mboweni said. “Those who talk about inflexible labour laws in South Africa, they should come to Ghana.”

AngloGold derives 28 percent of its gross profit from operations in South Africa.

AngloGold had been ordered to submit a proposal on how it planned to cut costs at Obuasi, Ghana’s Ministry of Land and Natural Resources said last week.

Gold mining companies in Ghana, Africa’s second-largest producer, would cut between 2 000 and 4 000 jobs by the end of this year to rein in costs over falling prices of the metal, the Ghana Chamber of Mines said on Wednesday.

Illegal miners were also a “huge problem” for Obuasi, Mboweni said. AngloGold employees at the mine had told Mboweni that if he demanded their removal, he might “start a war”, he said.

AngloGold rose 0.92 percent to close at R148 yesterday. Gold fixed $22 up at $1 263 an ounce in London yesterday afternoon. – Bloomberg