AngloGold Ashanti Ltd: Eliminating The Digital Divide And Reducing Overhead Costs With Satellite

When a corporation has production information that must be transmitted from remote sites in the field to its headquarters in an area lacking a traditional communications infrastructure, IT network managers face many challenges for overcoming such a daunting task. Add in client communication needs and information transfers that must remain secure from the developing world to the developed, and now you have a scenario that seeks a far more complex solution than merely transmitting content from point to multipoint.

Such was the case when network executives were trying to close the communications gap and ensure return on investment for the Ashanti Goldfields Group, a mining company with its head offices in the African country of Ghana.
In 1897, the principals of the then newly formed Ashanti Goldfields Corp. led a team of engineers which dragged and carried 40 tons of equipment from the West African coast to a point nearly 120 miles inland to begin exploitation of the new mining area at Obuasi. Ashanti has undergone several changes since then, expanding from a single mine in Obuasi into an African-based international gold mining and exploration group with six producing mines in four African countries: Ghana, Guinea, Tanzania and Zimbabwe, as well as offices in the United Kingdom and Isle of Man.
Those gold fields remain in operation today, with both surface and underground operations located in remote regions of several countries, and in April 2004, AngloGold Ltd. and Ashanti Goldfields merged to form AngloGold Ashanti Ltd., a global gold company with 20 operations spread across four continents, a project pipeline and a worldwide exploration program. But it was not until this past decade and prior to the merger that a robust communications network platform became part of the company’s infrastructure.
In order to compete effectively within the global business arena, a communications solution was needed to ensure seamless transmissions of voice and data. In fact, one of the most significant challenges that faced the gold mining operation, particularly because its business is established in Africa, was that the road and telephone infrastructures within the various countries the company operates in were very limited, hindering its business growth. Such inefficiencies of information transmissions many times caused delays in communications and inaccurate data transfers. Before the advent of satellite communications in Africa and particularly in the areas AngloGold Ashanti operates, communications were either delivered by hand, through road transport or on occasion by conventional telecommunications that were few and far between.
"Before the network, the communications costs were high," says former Corporate Telecommunications Manager Kwasi Amoa. Amoa designed, planned and supervised the implementation of the communications infrastructures and networks in Ayanfuri, Siguiri, Bibiani and the Geita mines. "The communications infrastructure was not as reliable as we needed it to be. The project consultants for the construction and operation throughout the mines and the team members of the construction companies needed reliable systems to obtain information and communicate with their home countries. Project management was hindered by the lack of telecommunications infrastructures. In spite of the foregoing constraints, frustrations and difficulties, we were able to complete mining projects on time and within allocated budgets due to the satellite communication network that was established," Amoa added.

No Easy Fix
With satellite-enabled communications, workers at the gold mines have been able to provide a reliable and effective communications system throughout the remote sites. But getting there was no easy feat, because from the opening of the Obuasi mine more than a century ago, there has been no effective and reliable telecommunications infrastructures available. Likewise, one of the most challenging obstacles executives had to overcome centered on working with regulatory officials and policy makers in an effort to grant the right licenses for a satellite network to become operational.
Once the regulatory bodies approved the satellite-enabled platform, materializing the new network did not, however, become functional overnight. In fact, network managers at the mining sites faced various challenges during the implementation of the satellite communications platform.
During the construction phases of the remote mines in Bibiani, Siguiri and Geita, data and voice communications between the head office in Accra and the sites were not possible. Even with the Inmarsat mobile systems that were incorporated initially to establish a communications link became challenging in the absence of an overall communications platform.
In fact, establishing a robust network infrastructure became even more paramount when the company’s business dynamics changed when it went public. "This meant that the company had the obligation to ensure that information was made available and timely to its shareholders and stakeholders. One of the telecommunications initiatives was to provide reliable, efficient and effective communications to enable information dissemination, electronic mailing and Internet accessibility," said Amoa. "There were many different options for communications network infrastructures, all of which could potentially satisfy our requirements. The technology adopted was very small aperture terminal (VSAT) or satellite earth station for the backbone connectivity, and radio technology communications links shorter than 10 kilometers within each mine site."
Despite the challenges and attendant difficulties, the implementation of the satellite communications network continued. Once completed, it provided miners controlled access to the Internet, public telecommunications service providers and private network systems. It also enabled voice and data communications between locations within the company as well as with the outside world. Network managers and engineers in the field facilitated email and messaging systems, enhanced Internet browsing and allowed fast group accounting, reporting and consolidations.
In the mid to late 1990s, electronic communications was becoming a critical mission facility for the company, adds Amoa. "The need to align the company’s business strategies triggered an initiative to improve the satellite communications infrastructures. We consulted to redesign the existing satellite infrastructure to ensure optimum technological improvements to meet the business needs of the company. The key driving forces for the redesign improvement project was the effective and reliable data and voice communications and the provision of redundancy links for communications," Amoa added.
Once completed, the performance of the redesigned and upgraded satellite communications systems has since then been one of the main factors of success for information management within the organization. More directly, mining operations depend to a large extent on right information from all its business units in the value chain, namely management mining and geology, engineering, supply and purchasing, finance and accounting, human resources and investors relations.
"In order to achieve cost consolidation and cost reduction and high productivity, right information must be obtained at the right time. The satellite communication technology in Africa has become a premier source of communication systems for most of the mining companies, which has a number of remote mining sites with no communication infrastructures. Satellite communication has provided reliable communications not only to mining companies but also to other business communities and subcontractors associated with us. Information for our company is now readily available, accurate, timely, measurable, verifiable and cost effective. The right information is delivered at the right time since the telecommunications infrastructures are now available and reliable," says Amoa.

Outcome of Satellite Network
Operational performance and supply chain and inventory management have been greatly improved due to the installation of the satellite communication systems. The reliability and performance of the satellite communication system has greatly improved the desired timely information flow and sharing within the organization. "Our company gained an advantage over its business competitors in Ghana partly due to the implementation of the satellite communication system and helped it become the industry leader in Ghana," says Amoa. "We have achieved real time communications through our satellite-enabled network allowing all sites to disseminate the mining data throughout the corporation."
In addition to the connectivity among the remote sites, the voice network also can transport graphics, permitting business conversations to be routinely accompanied by real-time data presentations, spreadsheets, computerized design images, whiteboard charts and other graphic applications, enabling executives to have more efficient meetings on a global scale.
"Because of our global reach, we also needed to ensure that the data transmitted remained secure. The company implemented Cisco security software features on the gateway routers for the wide area network (WAN). This has secured and protected our customers and users in the organization from losing data integrity and keeping computer hackers at bay. Likewise, the traffic volumes on the satellite communication links are monitored to measure the bandwidth utilization and the traffic speed," adds Amoa.
This network monitoring also has improved the real-time communication to our customers and within the company. The satellite communications system provides a platform for corporate intranet and other corporate-wide collaborations.
In addition, the network is designed to have redundant routings to increase efficiency and effective communications. The service provider, GS Telecom is responsible for the management of the network to ensure performance and to reduce downtime and stabilize the satellite communications system. "Today, the network is operating at nearly full capacity and is functioning very well," says Michael Blair, managing director of GS Telecom.
"The implementation of a satellite communication system in AngloGold Ashanti has added value, revamped and changed the direction of communication and information sharing resulting in the well-earned competitive advantage in the gold industry," says Amoa.

Cost Savings Realized
The initial capital cost of the project was $1.7 million and the annual recurring charges (bandwidth, license fees, etc.) ran roughly $1.2 million. But according to Amoa, reduction of costs related to telecommunications and travel has been achieved with the implementation of the satellite network. For example, before the installation of the system at one of the mines, the yearly telephone bill was roughly $90,000. The yearly cost was then reduced to $20,000 after the implementation. "The company’s biggest achievement toward gaining returns from resorting to the satellite system is through the use of routing its international communication traffic via the cheapest international call rates. In totality, the satellite communications system has ensured optimal operational efficiency and consequent gains for profitability," says Amoa.
Total savings have reached about $2.5 million annually throughout a period of five years. This analysis indicated a payback of two years, internal rate of return of about 70 percent and a net present value of $2.7 million by 2004, with company cost of capital of 11 percent, according to Amoa. Furthermore, the saving of business telephone calls far outweighed the additional costs of the network, added Amoa. "An attempt was made to evaluate the financial benefit and also to access the return on investment from the communications infrastructure of our company."
The implementation of a satellite communication network has helped AngloGold Ashanti overcome the constraints, frustrations and difficulties the company grappled with in communicating information within the company and with its customers. The welcome result is that the remote sites are connected to the corporate office and the World Wide Web for information. The satellite communication network also has opened up a gateway and supported delivery of information to the right business units within the organization. The system also provided support for the financial restructuring process AngloGold Ashanti undertook.
The overall reliability of information dissemination and sharing in the organization has put the company on the right path for success, high performance and productivity of the mining industry in Ghana, says Amoa. Likewise, the timely transmission of relevant and accurate information and its accessibility has assisted the corporation to make its mark as an industry leader in Ghana’s economic environment. "It has greatly improved and given way to a growing sense of optimism for optimal operational efficiency and excellent profitability, operational performance and supply chain and inventory management," says Amoa. "This has provided solid support for the financial restructuring process with solid results and clear profits. Through the use of this indispensable tool of satellite communication, we have cultivated fertile ground for furthering our investments and enjoying the strong returns." 

Nick Mitsis is the Editor of Satellite Business Solutions.

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