Ghana Chamber of Mines : Gov't should take risk and invest in mining

Chief Executive of the Minerals Commission, Dr Toni Aubynn has charged government to reform key policies relating to the extractive industry and invest more to ensure the country benefits from our mineral resources.   

He says, Ghana seems to be a mono mineral economy with over-reliance on Gold which accounts for over 90% of our mineral export.

He argued that mining should be the basis of industrialisation and linked with other sectors of the economy.

Dr Aubynn was in a conversation with David Noko, Executive Vice President in charge of Global sustainability at Anglogold Ashanti, South Africa and Jerry Ahadzi, Principal Policy Officer at the Minerals Commission. They spoke on Toni Aubynn's Take on Multi TV.

The Minerals Commission Boss, who has been an industry player for about two decades with stints at Tullow oil, Goldfields Ghana and the Chamber of Mines believes that critics have gotten the arguments fundamentally wrong by comparing mining towns in Ghana such as Obuasi and Takwa with cities like Johannesburg in South Africa, because gold deposits were found around the same time. 

He also asked if expectations of Ghana's major mineral deposits: Gold, diamond, bauxite and manganese have been exaggerated or poorly managed.

In his submission, David Noko said mining is cyclical with booms and lows, adding that global exploration for the past two years have generally being low. He however added that trends are often upward because of growth in economies, consumption and population demand.

The Anglogold Boss admitted that Africa is endowed with a lot of minerals but does not compete favourably with other continents and economies. This is because the fundamentals are not in place to enable mineral worthy nations to develop and improve livelihoods.Gold production in South Africa, according to Mr. Noko, was twenty times at its peak, more in volume and proceeds, compared to Obuasi; and Johannesburg's development has been good because businesses were committed to development with trade; good policies and circulation of capital within the country.  He added that diamond is being mined in the coastal seas of South Africa and Namibia as well.

Mr Noko added that countries such as America, Australia, Finland, South Africa and other mineral rich countries look inward for development. Ownership of capital and entities that hold these minerals must be owned equitably by residents of countries to avoid capital and mineral flights. "Scandinavian countries are very wealthy today because they had a plan and commitment to development, had a sense of nationalism, allowed very little capital flight and produced jewellery rather than export raw minerals," he emphasised, challenging Africans to wake up to reality and position themselves to compete with the world.

Dr Aubynn stressed as a reminder, that in 2012, government made attempts to revise policies to make the sector more viable, with corporate tax rising from 25 - 35%. Capital allowances were also re-mechanised with significant reductions and attempts to introduce windfall profit tax to get more from operators of the mining firms.

Mr Ahazi mentioned that the decline from 2013, has been about 500 USD because gold prices were about 1,700 USD an ounce and further dropped to about 1,200 USD in December last year. In 2012, the mineral sector accounted for 28% of government revenue, contributing about 1.4 billion cedis. Revenue further declined to 19% in 2013, contributing 1 billion cedis to domestic revenue.

Mining companies scaled down on employees due to decline in gold prices and production, with employees of AngloGold Ashanti being the hardest hit.He suggested that, in order for government to have a fair share of the mining cake, it needs a scheme or regime to automatically adjust benefits when gold prices sour up.   

He said governments over the period have not made conscious efforts at planning and developing mining areas in Ghana. There is over-reliance on corporate social responsibility by mining companies.

The policy officer pointed that "there are leakages against linkages". This, he said, is because we import virtually all mining tools from abroad, adding to capital flight. He called for a structural transformation of mineral-dependent economies with linkage to other sectors of the economy.

"As a country, we partly know our mineral endowment and the whole of Africa is under explored geologically. Currently in Ghana, bauxite deposit is estimated at about 180,000 metric tonnes in Kibi, with Anyinahin (in the Eastern Region) having between 350,000 - 700, 000 metric tonnes," he assessed, adding, " It is relatively difficult to determine gold reserves at the moment because the Geological Survey Department does regional mapping and mining companies that come into the country merely acquire concessions to conduct further exploration to prove these resources."

Mr Ahadzi advised Government to take a cue from Botswana; and invest in mineral exploration to a point, and engage Private Partnership to reduce risk business and ensure profitable returns.