Gold Fields’ spat with Ghana contractor heads for arbitration

A $740 million dispute between Gold Fields Ltd. and a mining contractor in Ghana will be fought out in arbitration.

The Johannesburg-listed gold producer said in an update this week that its spat with Engineers & Planners Co. is “now progressing to arbitration.” The miner confirmed by email that E&P has initiated the proceedings, which will take place in Ghana rather than an international tribunal.

E&P – whose owner and chief executive officer is the brother of Ghanaian President John Mahama – began dispute resolution processes in March, Gold Fields previously said. The contractor is claiming $474.9 million over the Tarkwa mine and $264.7 million for the Damang asset, a company report showed.

E&P told Bloomberg in April that its allegations concern “underpayment” for work performed at both operations. It said at the time that the firm was “looking forward to an amicable resolution” and hoped to settle the matter “without recourse to arbitration.”

While Gold Fields is trying to renew Tarkwa’s mining leases, which expire next year, the company last month transferred Damang to the government. The state then held a tender for the mine that was won by E&P.

E&P has been employed at Gold Fields mines in Ghana for more than 20 years, as a contractor responsible for services including drilling, blasting, loading and hauling ore.

A lawyer for E&P declined to comment on the arbitration other than to confirm that it’s based on the earlier allegations. Gold Fields said in the update this week that it’s “committed to resolving these matters in an orderly manner, while maintaining operational stability at Tarkwa.” The company said in March that it “disagrees with E&P’s position.”

Gold Fields, which operates mines across Africa, Australia and South America, produced about 2.5 million ounces of gold last year. Tarkwa was the largest single operation, accounting for almost a fifth of total output.

(By William Clowes)