Turbo-charging Ghana’s economy with mining

By: Nana Kwahu- Asante

A rise in metal prices and more stable market conditions have prompted mining companies across the globe to boost their exploration budgets by more than 40% in 2010, according to a report issued by the Metals Economics Group ? a leading worldwide minerals information and consulting company based in Canada.

The report, based on input from more than 3 200 mining companies, estimates that the total of 2010 budgets for nonferrous metals exploration has reached US$12.1billion (R91 billion).

The figure excludes the billions of dollars been injected in Ghana and other African countries by the Chinese governmenet and private businesses.

After rising for six straight years to a record high of US$14.4billion in 2008, nonferrous exploration budgets collapsed in 2009 to slightly above US$8billion as the global economic meltdown and declining metal prices hurt the industry. Metals prices ? the primary driver of exploration spending ? have since improved markedly and metals have traded well above the long-term trend-line throughout 2010, leading to a rebound in spending, the MEG report said.

The report notes, however, that the mining industry’s appetite for risk has not returned to levels seen before the economic downturn, as mining companies continue to face the threat of increased royalties, resource nationalism and windfall-profit taxes in many jurisdictions. “Exploration in a number of countries considered to be higher risk continued to fall in 2010,” the MEG report said. It includes input from companies that mine base metals, precious metals, diamonds, uranium and a few other industrial minerals. Is investment – hungry Ghana benefitting from this?

The bulk of exploration money in the Ghana is going into the gold sector, mainly from the AngloGold Ashanti, Newmont and Goldfields.

The Chinese businesspeople who bought the Awaso Manganese Company and Nyanihini property from Canada ’s Alcan are said to be waiting for the governmenet to fix the western railway line before they start work in ernest.

They are yet to invest in the company. AngloGold Ashanti is reported to have spent more than $630 million on its operations in the country since 2004 and its even contemplating spending more not only to justify its long term interest in Ghana , but more significantly uplift productivity as its flagship underground mine.

stakeholder meeting

At a recent stakeholder meeting in Accra, the Senior Vice President of AGA Ghana made it clear that besides the though not much has been achieved in terms of shareholder returns, reflecting the increasing difficulty of operating in the country, the task is to work hard to put Obuasi in full stream. Similarly the increasing antagonism between the government and the mining companies on environmental issues, unjustified power tariffs and other taxes, just to mention only a few, have been and continue to be major concern to the industry.

Goldfields, currently the leading gold producer, is not happy with the way illegal miners are undermining its efforts to construct an underground mine at Demang, while the government looks on unconcerned. Newmont, which was slapped with $4.3 million for environmental problems, without any basis is also not enthused. It is looking at constructing more than $800million mine in Eastern Region, which analysts say could generate thousands of direct and indirect jobs for the locals and Ghanaians in general.

Industrial watchers look with disdain the pressure on the government to bleed the mining companies with new taxes and throw asunder previous agreements signed with government before 2009. Goldfields has already spent millions of dollars for the expansion of the Tarkwa mine.

Some dozens of junior companies have also entered the fray, but they seem to be waiting for the major miners to lift them up. Canada ’s Kinross has recently swallowed Chirano Mine in the Sefwi area, while Noble Resources are putting plans together to revive the old Bibiani mine. Ayanfuri mine, which was formerly AngloGold Ashanti mine may restart mining next with Australian expertise and funding. Owere has begun mining at Konongo while Signature Metals intensifying its exploration project in the nearly concession. Australia ’s Azumah Gold is exploring in the Upper West

The discovery of oil in the waters of Ghana will certainly change the face of the country’s extractive industry all right, but it will be economic miss-calculation, If the government abandons the mining sector, which has steadfastly contributed significantly not only to the rural sectors but the Ghanaian economy as a whole.

The mining industry currently employs thousands of people and is also major source of development in the rural areas otherwise abandoned literally by the government.
Abandoning it in favour of the oil industry will be big disaster in the rural areas.

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