The 3 reasons why gov’t rejected the lease renewal of Gold Fields Damang Mine

The government has broken its silence on why it refused to renew the mining lease of Gold Fields’ Damang Mine.

After the news broke that the application of the company has been rejected, a heated debate was generated among industry players and analysts.

In an attempt the clear the air, the government has revealed the reasons informing its decision, citing serious regulatory and operational deficiencies that rendered the company’s application untenable.

In a detailed explanation, the government outlined three major failings on the part of the mining giant. The government has therefore decided to assume operational oversight of the mine effective April 19, 2025.

Emmanuel Armah Kofi Buah, Ghana‘s Lands & Natural Resources Minister

It says the move is legal and necessary to protect the national interest.

According to the document published by the Minister for Lands and Natural Resources, cited by The High Street Journal, the following are the three main reasons why the government rejected the application;

1. Failure to Declare Verifiable Mineral Reserves

At the heart of the rejection is Gold Fields’ failure to declare verifiable mineral reserves in its renewal application. This is a critical legal requirement under Regulation 189 of the Minerals and Mining (Licensing) Regulations, 2012 (L.I. 2176).

The regulation mandates that an application for lease renewal must be accompanied by a comprehensive technical report that includes confirmed mineral reserves. This would, for instance, specify how many ounces of gold are available and how much can be economically mined, justifying the need for an extension.

No such reserves were declared in the application, making it impossible for the Minerals Commission to recommend a renewal. In what many see as vindication of the government’s position, Gold Fields’ own 2024 Annual Report, published after the rejection notice, also failed to present any such reserves.

2. Absence of a Detailed Technical Program

The second red flag was the lack of a robust technical program. The application failed to detail the company’s operational history over the past three decades or provide a forward-looking plan for continued mining activities.

Without such a program, government authorities said they had no basis to assess past performance or the strategic direction of the mine which is an essential element of informed and responsible decision-making in the sector.

“This absence made it impossible to determine the mine’s viability, its commitment to compliance, or how it intended to deliver long-term value to the State,” an official familiar with the review process noted.

3. No Budget for Exploration in the Last Two Years

Even more telling was the revelation that Gold Fields had not allocated any budget for exploration at Damang in the last two years. Exploration is the bedrock of sustainable mining, serving to discover new ore bodies or convert known resources into extractable reserves.

The company’s failure to invest in exploration raised serious doubts about its long-term commitment to the mine and the community that depends on it. “A mine that is not investing in finding its future is not securing jobs, growth, or sustainable operations,” the government’s release emphasized.

Invoking Article 257(6) of the 1992 Constitution, the government declared its intention to assume oversight and operational control of the Damang Mine. The State, it said, is committed to ensuring uninterrupted operations, protection of jobs, honoring of existing valid contracts, legal and fiscal compliance, and maximizing Ghana’s benefits from the resource

This development signals a firm policy shift towards greater accountability in natural resource management and reflects the State’s resolve to enforce mining regulations, demand transparency, and ensure that mineral wealth translates into national development.

Source: thehighstreetjournal.com