After gold, Ghana is rich in aluminium, salt, manganese, lead and iron ore.
Ghana is well known for its mineral endowment, and economic stability is highly dependent on mineral resources. After approximately 13 months in office, what are your key priorities to develop and address some of the challenges in the sector?
Hon. Nii Osah Mills (NOM): One of the key challenges in the sector is the falling price of commodities. Ghana relies heavily on revenue from gold exports. We recognize that commodity prices are cyclical and this is not a challenge unique to Ghana. However, as government, we are working with the mining companies affected by the dip in the gold price to revamp and redevelop their operations, cut costs and take other measures to continue mining.
For example, AngloGold Ashanti could not maintain prior production levels, and needed to reduce its workforce. Through negotiations with the company we were able to ensure that the staff who were let go were adequately compensated. Similarly, AngloGold Ashanti requested an amendment on their mining operations to mine at a reduced rate while they redevelop their mine to create a leaner operation. As government we are willing to negotiate and work with the mining companies and we reached an appropriate agreement. They will undergo a maintenance period of two years and ramp up in two years time with an increased workforce and production.
We are also encouraging new investments in the mining sector. Asanko Gold is currently building a new mine in the Ashanti region and by 2016 will be pouring gold. This is extremely encouraging for the sector; an international investor is able to operate bullishly and profitably in a time of a downward trend. There is light at the end of the tunnel. Clearly the policies in Ghana are attractive for new investments.
What incentives are in place to promote investment and diversification into other minerals?
NOM: We are looking to promote investment in other minerals, including bauxite. At the moment we only export bauxite with no value added in the country. We need to create a value chain in Ghana and increase employment opportunities for Ghanaians. There are huge opportunities to produce aluminum, salt, manganese, lead and iron ore. We are actively seeking new investors to reduce our reliance on gold.
The Minerals Commission welcomes new investors and has large quantities of geoscientific data available for the investor.
What can investors expect to see with regards to changes to the mining code?
NOM: Royalties are pegged at 5% and there are no plans to change this. We allow for the export of gold and the retention of large sums of money overseas to be used for the purchase of equipment.
However, one major change to the mining code will be to control illegal artisanal mining. The government needs to have the legal backing to confiscate the equipment and proceeds from illegal mining activities. The revenue generated from small-scale mining equates to 34% in the gold sector, but Ghana does not receive tax from these operations.
In Ghana, illegal mining activities are facilitated by the use of heavy equipment. A bill to amend the Minerals and Mining Act is currently being considered by Parliament, which when passed will give legal backing for the seizure and confiscation of all equipment used for illegal mining, as well as the product so mined.
We have created a special task force to flush out illegal miners. We are empowering authorities at the local and district level to take charge of these issues. Our approach is two pronged: firstly, we are looking broadly at the underlying reasons why people engage in illegal mining. Secondly we are creating alternative opportunities to attract people away from these activities. Furthermore we are working to group together illegal miners to create a formalized mining activity.
Power remains a key constraint in the mining sector in Ghana. What steps are being put in place to increase generation capacity?
NOM: Ghana has load shedding and power issues. Currently, water levels at the two main electricity-generating dams are low, impacting on the total generation capacity. We are encouraging the private sector to invest in power. We have a number of diesel-generating plants owned by private players. Diesel generators are currently facing challenges with maintenance, which has decreased the power available, but total installed capacity of about 2,800 megawatts (MW), which is higher than the demand.
In approximately one year, we will see a very different situation in the power sector. The government is bringing in two power barges to add approximately 500 MW of additional supply. Secondly the maintenance of the existing diesel plants will have been completed. Lastly, Ghana will have access to its local gas supply and will reduce our dependence on diesel. Therefore, investors can rest assured that they will have access to adequate electricity.
The mining sector in Ghana will continue to grow and, therefore, this is the time to invest in the country and our mining sector.
Countries such as Botswana have reaped enormous economic benefits by making in-country beneficiation a legal requirement. Will we see any legislation in Ghana to encourage more domestic value-addition?
NOM: We are looking closely at policies to encourage more in-country value addition. In the near future, we hope to encourage investments that make use of our extensive bauxite reserves to produce alumina. Such facilities rely on large amounts of cheap power, which Ghana cannot currently offer. By the end of next year, however, the situation should have improved to the point where we are a more attractive option for industrial investment.
As for gold, we are already seeing more interest in opening refineries. In August, I opened a new refinery in Accra, which should be the first of many more. This will open the door to more domestic manufacturing of jewelry and other items that can eventually be exported.
At present, Ghana does not have any laws that make domestic refining compulsory but the existing legislation does allow for the minister to set aside a certain amount of gold to supply local refineries. As more new refineries come online, we will be looking closely at the implications of this law.
Exploration has dropped on a global level, but Ghana seems to be worse affected than its neighbors. What are the reasons behind this trend and what is the ministry doing to reverse it?
NOM: We have recognized the trend for explorers to favor other countries and are taking steps to make Ghana a more competitive jurisdiction. We are holding talks with the Ministry of Finance and the Ministry of Environment to establish where we are going wrong and how we can address the situation. Nevertheless, it is important to reiterate Ghana’s existing competitive advantage: we offer great stability, particularly compared with other countries in the region, we have a long history of mining and a highly skilled mining workforce.
This interview was part of research being conducted by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2016. A pre-release report on the Central African Copperbelt was released in October 2015 and can be accessed here. To participate in this report, please contact Amal Lahraichi at email@example.com