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Ghana Mining Report Q1 2009
Business Monitor International, March 2009, Pages: 46
This Ghana Mining Report provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Ghana's mining industry
Ghana hosts the second-largest gold deposits in the African region after South Africa. Consequently, the nation derives a bulk of its external revenues from gold mining –forming as much as 90% of the total mineral exports of Ghana. Apart from gold, Ghana also produces significant quantities of bauxite and diamonds. The country is also counted among the top five nations across the globe for its manganese ore production. Ghana plays host to some of the biggest names from the global extractive industry – Gold Fields (Ghana), Newmont Ghana and South Africa’s AngloGold Ashanti.
According to data from the Ghana Chamber of Mines, reported by Reuters, Ghana’s gold output increased by 4% to 2.6mn ounces in 2008. Meanwhile, the rising price of gold – which has been seen as a safe haven during the credit crunch – resulted in mining revenues reaching US$2.3bn, an increase of 28% on 2007 levels. Gold accounts for approximately 90% of Ghana’s income from minerals.
Though the mining industry has been successful in attracting foreign capital, it has also been subject to criticism from the Ghanaian government, environmentalists and human rights activists. Foreign players have been known to exploit legal loopholes and abuse both human rights as well as the environment. However, stakeholders in the mining sector claim that regulation over compensation need to be updated and that the current price levels for valuing crops, livestock and landed property for compensation have not been reviewed for a number of years. They also point out that in other African countries such as Tanzania, the state pays the compensation and not the miner.
The basic law governing the mining industry is the Minerals and Mining Act 2006 (Act 703). Under the law, the president holds the power to grant mining rights. However, the pressure to amend the law and allow farmers to have a say in authorising their lands for mining activity is increasingly gaining favour in the country – and is being seen as a necessary move to crack down on the rampant exploitation of the environment by mining industries.
Frequent disruption in power supplies is another challenge and continues to considerably escalate operating costs in mining operations. However, in June 2008, the Ghanaian cabinet gave the go-ahead for the country to develop a nuclear power sector. If realised, the new plant will diversify the country's power sector and offer the boost in generation that Ghana requires to meet demand.
Industry Forecast
However, with gold being Ghana’s principal asset and prices remaining strong, forecasts for the mining sector in Ghana are more positive than for some of its African neighbours. In calculating its forecasts, the publisher has also taken account of the vast untapped potential of Ghana’s mining industry. As such, the publisher expects the value of the mining industry to increase from US$1.03bn in 2008 to US$3.14bn in 2013. However, Ghana is still many leagues behind South Africa when it comes to regulations to protect the rights of the locals. Injustice against the mining communities and lack of proper compensation is an everyday affair that usually passes unnoticed. Indeed, according to the Ministry of Mines and Energy, approximately 30% of Ghana’s land is under concession to mining companies and every year more farmland is converted for this use. However, the Commission on Human Rights and Administrative Justice (CHRAJ), claims that Ghana’s mining laws are designed to attract foreign investors and not to protect the rights of local communities. Particular problems include the pollution of water sources, the deprivation of land and the loss of livelihoods.
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