AngloGold Ashanti signs gas deal for Aussie mines

Gold miner AngloGold Ashanti (NYSE:AU) has signed a $140 million agreement with natural gas infrastructure business APA Group (ASX:APA) for a natural gas pipeline to supply the remote Tropicana and Sunrise Dam gold mines in Western Australia.

The 292 kilometer Eastern Goldfields Pipeline will connect AngloGold’s mines to APA’s existing pipelines and is seen saving the South African miner millions of dollars in energy costs.

“Gas power generation is expected to reduce cash operating costs at both sites by between A$25-$30 an ounce,” said Michael Erickson, AngloGold Ashanti’s senior vice president in Australia.

The companies said engineering, design and procurement work has begun, with construction expected to start in February 2015. Gas transportation services are due to commence in January 2016.

“The pipeline and gas transportation agreement will also provide continuity of fuel supply, reduce exposure to diesel price volatility and significantly reduce the number of trucks on the road,” Erickson said.

APA Managing Director Mick McCormack said that the new pipeline could be further expanded to service other mines in the region.

“Access to natural gas, a reliable and cost competitive energy supply, will assist our new and existing customers in reducing costs at their mining operations,” McCormack said.

AngloGold Ashanti said the use of natural gas, a cleaner fuel than diesel, will mean lower greenhouse gas emissions.