Accra, Ghana

GSE Feed

Forex Rate

Q & A with CEO of Goldfields Nick Holland

CEO of Goldfields - Nick Holland
CEO of Goldfields - Nick Holland

Nick Holland was appointed CEO of Goldfields on 1st May, 2008.

Prior to that he was the company’s Chief Financial Officer.

Mr Holland has over 31 years experience in financial management, of which 23 years were in the mining industry.

Prior to joining Gold Fields, he was Financial Director and Senior Manager of Corporate Finance at Gencor.

Gold Fields recently announced, that they have secured a development agreement with the Government of Ghana.

This makes them the third mining firm to have been given such an agreement by the government of Ghana after AngloGold Ashanti and Newmont.

In this interview with Citi Business News, Nick Holland talks about the new agreement, the mining firm’s operations in Ghana and the mining industry in the country.

Citi Business News: How are Goldfields mining concessions faring in Ghana? For example the Damang and Tarkwa mines.

Nick Holland: Tarkwa is doing reasonable well, but we have to remember the gold price has come down from the highest of $1,900 dollars in 2013 to currently $1,200 dollars an ounce.

So we have to tighten our belts in a number of areas.

Damang has been losing money and so we have to decide on what we are going to do with Damang. We believe there is a potential for a reinvestment into Damang and we are certainly working through the numbers. I’m cautiously optimistic that we will come up with something that makes sense and we should be able to let the market know and all stakeholders by the middle of the year what we are going to with Damang.


Citi Business News:  Can the challenges at Damang, lead to layoffs if not solved.

Nick Holland:  We have 2000 workers at Damang, between contractors and our own employees.

So clearly if we shut the mine those workers job will be at risk.

Now obviously we are very sensitive to that and we don’t want to do that. We want to come up with a solution for Damang and we think we can. So we are going to work very hard to come up with a solution that ensures the sustainability of Daman long into the future and that is what we are going to do and protect jobs and protect the contribution that it makes to the economy. That is what we are looking to do.

Citi Business News:  Is that an assurance that we are not going to see workers go home in 2016.

Nick Holland:  Look, we can never make any constant assurances about that because we don’t know what is going to happen to the global markets, gold prices such we do not have  any control over that but we are going to work very hard to try and prevent that. That’s what is uppermost on our mind.

Citi Business News:  We are picking reports that some 400 workers at the Damang mine have already been made to go home this year. Is that the case?


Nick Holland:  Yes, we have retrenched some workers but most of those workers have been absorbed into mining contractors who are providing us with business. So, in fact the number of people who have not been accommodated is actually quite low. So I don’t think there has been whole scale loss of jobs here, the loss of jobs has been minimal because we have been able to transfer those people to the contractor.

Citi Business News: You recently signed a sustainable agreement with the Government of Ghana, we are told this deal will save you some $33 million dollars.

Nick Holland:  Well, It depends on the gold price, when there is obviously reduction in taxes and royalties it is very difficult to quantify what the saving is. It really depends on what the gold price is and what the costs are, but certainly it is a more beneficial arrangement than what we had.

So that does improve the sustainability in the operations, again, but I wouldn’t want to quote numbers, because it really depends on prices and costs.

Citi Business News : With this arrangement, what is the lifespan and what is your gain, was it a win-win situation?

Nick Holland:  It is a win-win because what we can do here is; we think there is a good opportunity now for us to come up with reinvestment, case for Damang we still working through the numbers we haven’t finished yet. We should be finished with the analysis and recommendation to our board by the middle of the year and then we would be able to make a decision but certainly, I think the development agreement puts us in a strong position to bring about a longer term profile for Damang and for Tarkwa. I think also it ensures the longer term sustainability because we have invested quite a lot of money back into these mines. So this ensures that we can continue doing that so I think it’s a win-win because it will ensure more revenue, more foreign exchange earnings for the country, I think in the long run more taxes in absolute terms and royalties to the fiscals and more jobs or certainly protection of existing jobs for the minimum, for longer period of time. So I think it’s a win-win.

Citi Business News: How long is this stability agreement going for?

Nick Holland:  We are looking at around 10 years with the potential to renew for a further five years.

Citi Business News:  Do you think that this kind of agreement you’ve secured in terms of taxes and royalties, the rebates that you are getting in the long term would see your business move on in a better way?

Nick Holland: I think we can grow the pie. By growing the pie everyone wins, the relationships that are sustainable over time are those where everybody wins that is what we are looking to do. I think there is an agreement which helps everybody to win.

Citi Business News: Are you looking at new development areas apart from the Damang and Tarkwa mines?

Nick Holland: Well, we have got lots of potential on our leases for expansions maybe and new mines to come on streams or new odd sources. So, one of the things we’ll be doing over the next five years or so is examining the potentials for other sources of Goldfields that will certainly help us and look we continue to look for other opportunities in the country to grow our footprint and we would be quite happy to invest more in Ghana if we were able to secure other operations. You know something; we have an open mind.

pix 2

Citi Business News:  How have the fallen gold prices affected your company?

Nick Holland: Look, we were hit very hard. The industry was hit very hard. Now, when you lose $500 dollars an ounce on your price, your constants disappears immediately so we had to work very hard to reduce our costs. So over the last four  years globally across the Group we have dropped our costs by 35% and that has not come for free and we have had to let 12% of our global workforce go, over 12,000 people across the world Australia, South Africa, South America and Ghana.

You know, we lost people, we had to pull back hard on our contracts across, we had to look at every dollar in the business we spend and we have been able to pull ourselves back into a situation where we are making money. So I do hope the gold price moves up in the longer term but I fear that it will be volatile for the next couple of years before we start seeing that kind of move up.

Citi Business News: What are your projections for gold prices?

Nick Holland:  I will be a brave man to forecast the gold price so, am not going to try and do that. I am rather going to say that, we are setting up our business to make sure that the price has come down but from here that we still going to be in the game. So that’s what we are going to try and do, but in the longer term I do think that gold price will go up, it may not get back to the levels it was at the highest but certainly it will go high than where it is today. When that is going to happen, it is very difficult to predict, it will depend on market sentiments across the world, it will depend on global supplies coming down; it will depend on diamond, but I think in the longer term the fundamentals for gold are good but this year it may be sideways. It may be a little down from here so we’ve got to be vigilant in preparing ourselves for the worst case.

Citi Business News: What do you say to those who say that, mining companies failed to save when gold prices were up, that is why they are struggling to deal with the current low prices?

Nick Holland:  Excellent question, I think the gold companies were not as vigilant as they should have been. The industry as a whole is not vigilant as it should have been saying hang on a minute; the gold prices have gone up so much but we have to bear in mind we can’t just restate all of our focus on the high prices thus spending more money and then price comes down we are in trouble, so I think we did chase ounces too much, we chased growth targets and we have been one of the first companies to change in 2012. I said in Northern Australia that the industry should move from ounces for ounces sake and it should move back to cash flow, and trying to grow its cash flow and pay dividends to shareholders.

Citi Business News:  Many mining companies have been blamed for the destruction of lands and forest reserves. What is the strategy of Goldfields in conserving lands?

pix 3

Nick Holland: Well, we’ve been investing in projects sponsored and run by the leadership conservation Africa and in the Shai Hills project itself which is a natural reserve not far from here. We in fact invested a fair sum of money in building some tents to attract people back to nature hills so that people can recognize the value of nature. And so we have now donated our interest in that to the Forestry Commission and the idea is for them to find an e-converse. We also remain involved in the leadership conservation in Africa and in fact our Executive Vice President, Mr. Buck who is our representative.

Citi Business News: So you are saying that when it comes to Damang and Tarkwa mines you are doing all you can to ensure 10 years down the line, when you are gone, we can reclaim these lands or put them back into agricultural use or something else?

Nick Holland: Absolutely, but we still have many years to go so, I think it’s premature to start thinking about changing the mines lease into agricultural lands but overtime that will certainly be part of our closure strategy.

We think that we going to be here for a long… long time. So I don’t think closure is an option for us, we want to continue expanding our footprint. You know we have two foundations that we have set up for each of our mines whereby we contribute a certain percentage of our profits each year to the foundations and the scope of those foundations is to look at things like conservation sustainability.

Citi Business News:  How has the cedi’s performance affected your operations if at all?

Nick Holland:  Look, most of our transactions are in dollar terms so the cedi doesn’t have a huge impact on our business. You know, if you work in Australia or South Africa or Canada they have had the benefit of weaker currencies to offset their costs and lower gold prices. In Ghana we don’t have that, you know, so when the dollar goes down we see the full effect on the bottom line. So the team here has to work even harder to make sure they stay in business. It is not easy. The cedi depreciating does not help us that much.


Left Menu Icon
Citi Business News
Right Menu Icon