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05.03.2013 Opinion

Ghana’s Gold: Open Sesame For Anyone Who Can

By Ernest Opong
Ghana’s Gold: Open Sesame For Anyone Who Can
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Two young Americans from Utah in the United States dabble in real estate and make millions only to lose their fortune during the 2008 recession. Deep in debt, they look to Ghana to repair their economic malaise because in their own words, the country sits on gold reserves worth more than $300 billion, one of the world's biggest.

And the good thing about it is that it is free-for-all mining. All one needs is the courage to bear the scourge of mosquitoes and the humdrum of jungle insects, and for a few weeks one can earn a fortune for a lifetime. And that is exactly these two men from Utah did: They travel to Ghana, acquire a “concession” for gold mining from the chief of the area and dig for gold. Within days of arrival they see progress and hope. This is the gist of a Discovery Channel documentary currently running.

Even though the main characters are the two Americans the principal message the documentary sends to viewers, particularly those from other countries who have access to the channel becomes so clear: The government and people of Ghana CANNOT and DO NOT regulate the exploitation of gold in their country.

Illegal gold mining is not new in Ghana. What is known as galamsey, a corrupt form of “gather them and sell” has been going on Ghana for as long as gold has been found in the country. And that is a long time even before the arrival of the European on the country's shores.

Until now it was small-scale mining undertaken by the natives and engineered by human labor with no mechanical equipment. Until recently it was also an illegal act largely dominated by Ghanaian youths who, for lack of jobs resorted to the get-rich-quick but dangerous endeavor of gold mining. And until now it was not as environmentally devastating.

Foreign interest in Ghana's gold goes back to the 15th century when the Portuguese landed at Edina and renamed it the El Mina where they found the native people mining gold. That the mineral is still a major economic backbone of Ghana is a marvel.

According to the Discovery Channel documentary, a small section in the middle of Ghana's Ashanti Region holds as much 250 million ounces of gold worth about $300 billion. The truth of the matter is that as a country, Ghana can practically bring down the price of gold if it is possible to mine all of the deposits at one time.

Without necessarily overhyping it, large gold deposits have been discovered from the coastal regions in the south to the northern regions. Ghana has enough gold to be economically independent, but does it have control over it.

The new attraction in Ghana's gold is driven by the ever-increasing market price of the mineral. CNN Money reports that the current price of gold per Troy ounce is $1,790. A short breakdown of Newmont Ghana's operational costs as against taxes paid to government as well as royalties to land owners and other financial liabilities translates into a colossal profit margin for a company that enjoys a generous fiscal regime from the government of Ghana as well as lower labor and energy costs.

Alhassan Atta Quayson, writing in African Agenda Vol. 15 No. 2 2012, states “The cost applicable to sales, which excludes amortization, depletion and depreciation, is made up of direct mining and production taxes and other related costs.

This implies that Newmont's $474 cost applicable to sales in Ghana includes royalties and all other production taxes paid to government.”

Comparatively, according to Quayson, per ounce production cost and taxes paid by Newmont in Ghana is a paltry $474 as against the world price of $1,562 culminating in a profit of $1,088 per ounce. Newmont's mining operations is the most profitable compared to their operations elsewhere. In Asia Pacific cost per ounce is $639; $560 in South America; and $594 in North America. And this is legal mining.

Characteristically, no such research has gone into the earnings made by the illegal foreign miners in Ghana. The Chinese, for instance operate independently. They use their own illegally imported labor. How they obtain the properties on which they mine is also not clear. Again the documentary throws a shadow of doubt on how they obtain land in Ghana.

When the two Americans who had obtained their property from the chief of the town went ready to start operations, they found the Chinese already digging. The chief denied giving the Chinese any land rights to the property and added that there is nothing he could do about that. The two adventurers resorted to acquiring an adjoining property to start their mining operations.

In addition to the clouds that hang over the acquisition of property for mining in Ghana are the accompanying security concerns. Chinese nationals who engage in illegal mining activity are known to possess arms they use to protect their operations. A few have been arrested and are facing deportation. But even more questions arise.

Legally, gold is considered a strategic commodity and can only be extracted by a legally sanctioned operator with permission from the Minerals Commission that has oversight rights over the industry. This implies that no chief has any right to offer land to anyone without the requisite legal permission from the central government oversight agency, this time, the Minerals Commission.

Clearly, mineral laws in Ghana are so relaxed that the authorities look away as the nation's heritage is exploited illegally by foreigners.

The security implications of the matter question the country's security agencies' readiness to defend the country in case of foreign invasion. The Chinese do not only come with heavy earthmoving equipment: they come with guns and heavy arms to protect themselves from the native people and competition.

Some who were recently arrested did not possess any residence or work permits and immigration authorities could not offer any explanation about how they entered. There is no smoke without fire, so goes the saying. Foreign involvement in illegal mining cannot continue in its current state without the connivance with Ghanaians who act as front men.

Added to the issues that go with illegal mining is environmental degradation. Illegal mining is impacting on virgin lands and farms and water bodies. In the Eastern Region for instance, the Birim river, a life line for more than a million people and animals is in danger of being polluted by such toxic material as mercury that is also endangering fish life. Sections have also been dug so deep parts of the river have ceased to flow regularly. The same goes for several river bodies in gold producing areas in the country.

Until recently with the growth of foreign interest in illegal mining, the major reason for the galamsey was the high rate of unemployment in the country. The incidence of foreign intervention has changed the dynamics and the only way to arrest the concomitant problems that have arisen is for government to institute strict regulations. Existing laws must be applied to weed out anyone in the country illegally engaged in galamsey.

It was once believed that the formation of cooperatives by small scale miners could provide the basis for effective government oversight and regulation. That was true then, but not now. Regulation starts from land acquisition to where and how to do the mining. As is now happening, so much arable lands are now being mined indiscriminately.

For a country that relies on foreign food aid to make up for shortfalls in food production, it is necessary for governments to pay particular attention to the issue. In addition to reduced food production, the quality and wholesomeness of food produced in some river basins will be questionable. High toxicity from food grown in areas with polluted rivers will begin to take its toll on the health of many Ghanaians.

Government must now also take a good look at the nation's immigration policy. It is not clear if Ghana has a border protection policy that checks who comes in through the various entry points in the country. Government must develop the political will to enforce the laws.

As if by design, politicians have ignored the issue of illegal gold mining in the country. Neither the presidential nor the vice-presidential debates said anything about it. No questions were raised and none of the candidates made any references to it. Does it mean that illegal foreign mining is a political minefield?

Surely the two young Utah adventurers are digging in with the hope that they would be able to redeem their debts at home. As long as the field is open for all, more foreigners will be lined up for “concessions in Ghana.” Have shovel, will travel to Ghana to dig.

This article was first published in Amandla Vol. 11, Issue 11 in November 2012 Kwabena Opong is the Editor-in-Chief of Amandla Newspaper, New York, NY

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