Sam Jonah and the Remaking of Ashanti
Sam Jonah and the Remaking of Ashanti recounts the inspirational life of one of Africa’s most prominent black businessmen. From working underground as a shovel boy to his appointment as the CEO of the trailblazing African gold mining company, Ashanti Goldfields Corporation, Sam Jonah’s fight for the top is a compelling read. Machiavellian deals, boardroom cliffhangers, political scandal and private battles are strewn like landmines in this account of the challenges of conducting First World business in the Third World. It is a hopeful story about breaking moulds and icons, not just in Africa but the world over.
Coast of gold
The South African AngloGold group effectively won its takeover battle for Ashanti Goldfields Co at the end of October 2003 when the Ghanaian Government gave its backing to the $1,55bn bid. Final approval came in April 2004 for the takeover, bringing AngloGold Ashanti to life.
All that glitters is not AngloGold Ashanti, but a lot of it is. The company almost immediately became a contender with rival Newmont Mining as the world’s largest gold miner. The combined AngloGold Ashanti produces around 7million ounces annually from its open-pit and underground mines in Africa, Australia, and the Americas (it has exploration projects in numerous other countries). In all, the company has over 20 mines in more than 10 countries. Prior to the merger, most of AngloGold’s mines were high-overhead, deep-level, hard-rock operations in South Africa (currently about half of sales). South African mining giant Anglo
American owns about 51 percent of AngloGold.
The new entity owes its existence to Sam Jonah.
Aarise, Sir Jonah
Born Samuel Essen Jonah on 19 November 1949 in Kibi, a military base in the east of the British Gold Coast colony, he grew up in the “winds of change” that presaged Ghana’s independence in 1957. The family moved to Obuasi where his ex-serviceman father was able to get subcontractor work from the Ashanti Goldfields Corporation. Sam romped through Obuasi elementary school and in 1962 was admitted to Adisel secondary school, a boarding establishment at Cape Coast. In 1969 he applied for and won a trainee position with Ashanti’s Ayeinm mine that included a scholarship for the Camborne School of Mines (CSM) in Cornwall, England. After two years at CSM, including an experience-gathering stint at an Australian gold mine, Jonah returned to Ashanti and in the subsequent 14 years worked his way up to the top and took over the management reins in 1986. At that time the group was producing an annual 210 000 tons of gold; by the time he negotiated the merger with AngloGold in 2004, output had soared to 1,6 million tons, and became, in 1996, the first African-operated company to list on the New York Stock Exchange.
He was knighted in 2003 for his contribution to global business.
In 1999, on Jonah’s watch, Ashanti was taken to the brink of catastrophe and the world’s mining birds of prey gathered to peck at the pending carcass. Ashanti owned some of the most productive gold mines on the continent, then worth over $2bn. Besides the giant Obuasi mine in Ghana, other lucrative operations were sited in Mali, Senegal, Guinea, Sierra Leone, Burkina Faso, Niger, Angola, Mozambique, Zimbabwe, Tanzania, Ethiopia and Eritrea. Ashanti’s Geita deposit in Tanzania was being described as “Africa’s new El Dorado”.
The reasons for Ashanti’s sudden vulnerability, and a lucrative target, were wildly fluctuating gold prices coinciding with a short-term liquidity, skittish stockholders dampening the share price and, critically, a gamble on gold prices continuing to fall by putting money into hedge funds, usually taken out as a form of insurance against a decline in output value.
The sudden reversal in the trend of gold prices saw Ashanti’s hedge fund become a terrifying liability, leaving the company in the red to some $570mn. Ashanti’s inability to meet the hedge collateral demands was a breach of other loans and conditions, including revolving credit facilities, project finance lenders and numerous bondholders. With a balance sheet debt of $400mn, the banks’ total credit exposure to Ashanti, including the hedge losses, touched $1bn as the gold price continued its ascent.
“A rack of missiles released by hedge counterparties, bankers, shareholders and the international press fell towards Jonah and Ashanti,” writes Taylor. “In the pause before they detonated, the beleaguered chief executive prepared to lose the job and career he’d planned and painstakingly forged from the age of 19. The bodysnatchers gathered around. Lonmin cut its original offer of $840mn down to $665mn, citing these losses. Others included the Saudi Arabian investor Prince Al-Waleed Bin Talal Bin Abdulaziz Al Saud, the Canadian-based Placer Dome mining group, and AngloGold of South Africa. Lonmin, already a substantial shareholder and management contractee, was favourite to take the prize.
However, Ashanti’s bankers, financial advisor and largest hedge fund creditor, Goldman Sachs, were not prepared to accept a quick sell-off. The crisis came to an end in February 2000 when a $100mn bridging facility was arranged by Barclays Bank as a stop-gap until a $326mn four-tranche refinancing package was concluded.
“The five-month trauma was strangely comforting to Jonah,” observes Taylor. “If he had survived this far, he told himself, then he could survive anything.”
As it turned out, the episode was Ashanti’s rebirth.
Sam Jonah’s board memberships
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