AngloGold Ashanti Inks Gas Pipeline Deal in Western Australia

AngloGold Ashanti (GSE: AGA) has signed a $140 million deal to build a natural gas pipeline for its Sunrise and Tropicana gold mines in Western Australia.

The agreement with APA Group calls for construction of a new 292km pipeline that will connect to the existing 1380km Goldfields gas transmission pipeline, which currently connects to Alinta Energy’s Newman power station and services Glencore’s Murrin Murrin nickel mine. 

The deal will help the AngloGold save millions of dollars in energy costs at its remote mines.

“Gas power generation is expected to reduce cash operating costs at both sites by between $25 and $30 per ounce," AngloGold senior vice president Australia Michael Erickson said.

"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.”

The agreement will provide both mines with 100 percent natural gas while retaining diesel backup capacity.

According to APA managing director Mick McCormack, the pipeline can be expanded in the future 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.”

AngloGold isn’t the first miner turning to natural gas. Earlier this year Fortescue Metals Group announced a similar signing for long-term gas transportation, helping the company reduce costs.

As the world’s third largest gold producer, AngloGold Ashanti owns 100 percent of the Sunrise mine and a 70 percent stake in Tropicana.

Construction on the project is slated to start February 2015 with the first gas scheduled for the Tropicana mine in January 2016.