Mining giant AngloGold Ashanti (JSE: ANG) is continuing to find ways to cut costs as the company reported less than expected earnings in the second quarter of 2014.
AngloGold reported a net loss of $28 million for the six months to end June, from a $1.9 billion loss the previous year. The world’s third-largest gold miner confirmed mine closures and layoffs were imminent to cut roughly $500 million from operating costs by December.
As part of its initiative, AngloGold Ashanti will shut down its Obuasi mine in Ghana to restructure the mine into a smaller, more profitable operation.
“Addressing the underperformance at Obuasi remains a key objective for us,” said Fred Attakumah, managing director of AngloGold Ashanti Ghana.
“We’re committed to engaging with the Government of Ghana, our employees and the other important local and regional stakeholders throughout this process, as we work to return this key asset to sustainable, long-term profitability for the benefit of all constituencies."
The company has already sold off its Navachab gold mine in Namibia for $104 million and is working to fix or sell mines or enter joint ventures on other assets.
According to chief executive Srinivasan Venkatakrishnan, the company is not entertaining the idea of an acquisition or merger. “Our focus isn't to rush into M&A but to get the operations on a better footing."
He added, “you can only do your best, you can't guarantee" that there will be no accidents.
Lower gold prices, higher capital spending and labor disputes eclipsed the company’s 17 percent increase in gold production output in Q2.