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21.08.2013 Feature Article

Gold Mining In Ghana Is Turning Out To Be A Curse (Part I)

Gold Mining In Ghana Is Turning Out To Be A Curse Part I
21.08.2013 LISTEN

Gold gave this country its pre-independence name. The Cold Coast became world famous for its gold, and European super powers fought for their share of the turf in order to gain access to the rich market in the interior.

Contemporary history tells us that when Don Diego D'Azambuja, the first Portuguese explorer who led his expedition to land on the Gold Coast in 1471, named the settlement then occupied by Nana Kwamina Ansah and his subject as El-Mina, meaning land of gold, in his native language.

In spite of the opulence created in the minds of foreigners about the riches of this country from its gold deposits, Ghana has been built mainly from the sweat of its aging cocoa farmers.

The famous highlife lyrics – 'Cocoa ye Ghana, Ghana ye cocoa' – tells everything about how gold has failed to deliver the necessary resources needed to build a modern state.

The Run-down sight at Prestea,Tarkwa and Obuasi tell the visitor every story about how gold has failed to inspire confidence in a population sitting on some of the riches of the world.

Unlike Pretoria in South Africa, where gold has aided the construction of the most beautiful city in the whole of Africa, gold in Ghana has only gone to enrich the budget of foreign countries, where share-holders' capital set up the various gold mining operations in Ghana.

On the positive side, we are told that export of minerals, particularly gold, is one of the largest contributors to Government revenue through payment of mineral royalties, employee income taxes and corporate taxes.

'In 2008, gold accounted for 95 percent of total mining revenue,' according to Wikipedia, the word-wide website.

We are further told that the mining industry accounts for five percent of the country's Gross Domestic Product, with gold claiming 90 percent of the mineral income. In terms of volume and monetary return, Ghana is the second largest gold producer in Africa.

Mining also provides avenues for employment for the people of this country. Anglo-Gold Ashanti provides 10,000 Ghanaians with stable source of employment.

Newmont employs 6,500 Ghanaians and has been credited with a number of community interventionists policies after mining its first gold in 2006.

In 2009, Newmont's concession in and around Kenyasi in the Brong Ahafo Region produced 531,470 ounces of gold up from the 2009 production of 524,000 ounces.

AngloGold Ashanti's Obuasi operations produce about 383,000 ounces of gold a year. In 2012, the projection was to produce 400,000 ounces.

While Obuasi, where mining began in 1897, is touted as one of the richest mines in the world, it is Gold Field's operation in Tarkwa which is proving to be the most lucrative in recent times.

Tarkwa, according to well-documented records in the industry, has a mineral reserves of 15.3 million ounces and a reserve of 9.9 million ounces. In the 2010 Financial Year, Tarkwa produced 720,000 ounces of gold.

In addition to these major players, there are many other small scale licensed operators with several thousand illegal miners.

One would have thought that with all these positive indicators of earnings from gold, the riches would rub off the country and the communities where these mining companies operate.

Gold in Ghana could aptly be described by the age-old adage, not all that glitters is gold. Obuasi, Tarkwa, Prestea and many gold mining towns and villages do not inspire confidence in first time visitors to these settlements, an indication that the trickle down effect is not working.

The Government of Ghana hold 10 percent free carried interest in all foreign licensed gold mining companies in the country, with the exception of AngloGold Ashanti.

In the case of the South African conglomerate, the Government of Ghana has a 1.7 percent share in the company.

How this works out is that the 1.7 shares is operational in all the company's global operations. Anglo-Gold, according to their annual report, has 21 operations world-wide and that the Ghana Government exercises its right to that quantum of shares in all these operations.

I am told that the company is about to open its 22 nd site in the Democratic Republic of Congo. The

Government of Ghana is expected to have its 1.7 percent shares in that company as well, which will delight operators of the state treasury.

For many Ghanaians at the wrong end of the economic meltdown, the news, a gloomy one as that, from gold mining front knows no end.

On Monday, the Public Accounts Committee of Parliament held its first public meeting since President John Dramani Mahama was elected and moved into Jubilee House.

The shocking disclosure that the executive arm of Government sent a proposal to Parliament House, virtually ceding the right to our gold earnings to foreign multi-nationals, providing the equipment and the capital to extract gold from the bowel of the earth.

We are told that the Government proposed to allow top multi-nationals to keep 80-100 percent of their earnings in foreign exchange.

To the surprise of citizens who heard the news for the first time on Monday, Parliament gave the proposal from the executive its stamp of approval. There are no prizes on offer for guessing correctly, which companies were involved.

AngloGold Ashanti, Newmont, Gold Fields Limited, Owane Mines and other leading conglomerates were given this blanket cheque.

To add insult to injury, the companies were given no time limit to keep their incomes. In other words, these companies could choose to keep all their earnings to their chest in perpetuity.

To crown a comedy of errors, Parliament gave ascent to a clause that put a constraint on the Government of Ghana and its citizens never to attempt to alter the agreement in any way. In essence, gold in Ghana has been willed to foreign multi-nationals.

The irony is that at the time this blanket cheque was issued in the Kufuor regime in 2003, the Chairman of the Public Accounts Committee, Mr. Kwaku Agyeman Manu, Member of Parliament for Dormaa sat in the House together with Mr. Alban Kingsford Sumana Bagbin, Member for Nadowli West. The two leading members of the Parliamentary Appointment Committee sat in the House with their eyes wide open.

As a Ghanaian, I am an angry with those who aided the promulgation of these kinds of laws. In my point of view, they do not only undermine the state, their action has taken away resources meant for development. I do not know the circumstances under which such an agreement was crafted in the first place.

In 2003, Nana Addo Dankwa Akufo-Addo was the Attorney-General of the Republic. He was also a Member of Parliament for Akyim Abuakwa. I would likely to kindly invite the Presidential Candidate of the New Patriotic Party to explain how this nation's resources were virtually doled out to foreign multi-nationals in this manner.

Like members of the PAC, who expressed indignation at this kind of arrangement, I am an angry Ghanaian. To quote Mr. Samuel Atta Akyea, MP for Abuakwa South and Member of the PAC: 'If you have such an agreement, is it not a very serious case where others are cheated?' The Member was referring to other companies that did not benefit from the 100 percent retention clause.

My beef is that this agreement is bogus and inimical to state development and cannot be made to stand in the statutory books for a week, after Parliament resumes.

To mitigate the problem, Mr. Ben Aryee told Members of the PAC that the beneficiaries of this bogus legislation have not insisted on their pound of flesh. In their own volition, they have returned a sizeable portion of their total earnings. I do not buy into this submission though.

Gold mining, I dare submit, has been more of a curse than a blessing. The muddy nature of the mighty Pra River, pollution of our environment and threats from galamsey operators, many of whom are prepared to kill to sustain their illegal operations, do not promote gold mining as an operation beneficial to this lovely country formerly called the Gold Coast.

Gold mining is gradually turning out to be more of a curse than a blessing to this nation!

 

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