The Minerals Commission of Ghana promotes Ghana’s mining industry.
BA: Over the last two years, the Minerals Commission has continued its strategic focus of promoting the development of the mining industry in Ghana and enhanced governance through the management and regulation of the utilization of Ghana’s mineral resources. Production of gold and the other key minerals, have been increasing over the years. In 2012 gold production reached a highest ever of 4.3 million ounces, compared to 3.7 million ounces in 2011. Increases in the price of gold contributed to this growth, as did the legal, institutional and fiscal regimes that we have in place.
Over the last 15 years or more, we have been attending various investment forums including Indaba and PDAC to bring information about Ghana to the attention of investors, and to interact with those investors who may not have the opportunity to come to Ghana very often.
With the changes in the global economic environment over the last four to five years especially the improvement of commodity prices, governments have been demanding an increased share in mining profits. While Ghana like other mining economies, is also interested in getting as much out of the mining sector as possible, we take cognizance of the fact that we need to, at the same time, ensure that investors get a reasonable return on their investments and security of tenure. In that context, we have started the process of dialogue with key investors to ensure that both in times of boom and times of bust, both parties do not feel unduly disadvantaged. The bottom line is for both parties to feel that they did not lose out.
Ghana has a long history of mining; what is the role that you foresee the sector playing in the national economy going forward?
BA: Mines have contributed significantly to the economy in a number of ways. In the last five to ten years mining has contributed about 40% of total merchandise export earnings for the country. In respect of government revenues, the contribution of mining has consistently gone up. As of last year, mining contributed about 28% of government revenues collected by the Domestic Tax Unit of the Ghana Revenue Authority.
Mining also employs quite a number of people; in the large-scale sector the estimate is around 28,000 people and some 1 million in the small-scale sector. Fourteen mines were in production at the end of 2012 and we had 235 companies in exploration. Gold accounts for about 90% to 92% of activity in the mining sector. The challenge that we have had this year therefore has been the decline in gold price. In the context of the marked declines that we saw during the second quarter of this year particularly, there are projections that production will decline by up to 17% for some mines. Overall, we could see a decline in gold production of about 10%. This has implications not just for the mines through restructuring, or even suspension of operations by marginal mines. Currently, 13 mines are in production, while they restructure to be more robust and new production is still being considered under today’s somewhat revived prices. Also, the other minerals are being promoted. The sector is therefore expected to continue to be a key one in the economy.
With the aim of advocating for the local supply chain, the Minerals Commission recently signed a Memorandum of Understanding with the Ghana Chamber of Mines. Can you explain how this initiative will bring more benefits to local communities?
BA: Our MOU was aimed at improving the local content structure that is in place. Since the mid-1980s, the law has called for the use of Ghanaian content to the maximum extent possible, consistent with efficiency, safety and economy. However not much was done for about two decades. Over the last three to four years, therefore we started an intense dialogue with the Chamber of Mines to develop a framework for implementation. The outcome was that in mid-2012 we passed regulations giving more details on the local content requirements. The regulations required the Minerals Commission to work with the industry to identify goods and services that can be procured locally at competitive prices and quality. After a long interaction with the Chamber, as the industry representative, we have come up with a group of eight items that mines are to procure locally. Going forward we are working with the industry to identify more items to be added to the list.
Given the dominance of gold in Ghana’s mining market, what steps are being taken to diversify into other commodities?
BA: Apart from gold, we have bauxite, manganese and some diamonds. Bauxite and manganese have both been mined for over 50 years. Apart from that being mined, Ghana has two other large bauxite deposits but which government has indicated that interested investors would be required to not only mine but also add value and at least refine a part into alumina to complete the link. Ghana already has a smelter, so this would lead to an integrated aluminum industry.
Beyond that, it is known that iron ore deposits exist in the northeastern and central parts of the country. We also have known deposits of limestone, which are being considered for clinker and cement production as well as provision of lime needed by the gold mines. Additionally, Ghana has potential for producing other industrial minerals such as kaolin and solar salt, which can provide the basis for industrial development.
Also, up until two years ago, we had no idea that Ghana had any base metals. However, following an airborne geophysical survey campaign in the eastern part of the country, it was discovered that we have occurrences of copper, lead and zinc. Further work has been done to improve the knowledge base, which is being packaged for investment promotion.
Do you have a final message for our readers about Ghana’s advantages as a mining jurisdiction, as compared to its regional counterparts in West Africa?
BA: Mining is high-risk business and necessitates a long-term perspective. Like in other sectors, Ghana’s mining sector has been a gateway to West Africa. The advantage that Ghana has is that it has been a stable environment for investment for close to 30 years. In the last few years where there has been turbulence in the commodities market, Ghana has demonstrated that the government can be trusted to enforce and comply agreements. Our human resources capacity is another big advantage that we have. Anywhere in the world where mining is taking place you will find Ghanaians in very key positions. Ultimately, Ghana is the base that servicing mining across West Africa and we are looking to expand that coverage to the entire continent.
This interview was conducted as part of the research conducted on African mining jurisdictions by Global Business Reports (GBR) as part of our partnership with African Mining Indaba LLC. The aim of this partnership is the production of the single most comprehensive intelligence report on the continent’s mineral sector. The Second Official Mining in Africa Country Investment Guide, will be launched next February 2015, as the only official publication providing country-specific information at Africa’s top mining event, the 2015 Investing in Africa Mining Indaba™ held in Cape Town, South Africa. You can view the 2014 Official Mining in Africa Country Investment Guide here