Several views have been expressed on whether or not Ghana should renew the lease of Goldfields when it expires next year.
Most views expressed so far seem more informed by the current happenings in South Africa, and sheer nationalistic sentiments rather than well-reasoned economic imperative and strategy.
Yes, the gold belongs to us, and by that right of ownership the greater share of the value ought to be retained within the Ghanaian economy.
Again, yes, Ghana has abundance of technical expertise to mine it’s own gold. This is borne out of the fact that, Ghanaians head and manage most of the country’s mines, in accordance with our local content regulations.What we lack, is financial capacity.
Finance can be the tricky element in the equation of mineral extraction.. We have recently had to take Bogoso -Prestea from Blue Gold (a foreign company) for lack of financial performance. I pray Heath Goldfields is able to raise enough capital to make it’s operations an exemplary success.
Same prayers go for Damang.
But we must be careful not to bite more than we can chew.
Tarkwa offers us an opportunity to develop our financial capacity, and the Mineral Income Investment Fund (MIIF), by it’s name and purpose is cut out for this.
My position is that, we should renew the license. Afterall even richer countries canvass for foreign direct investments. We should however, seize the opportunity to acquire equity in the mine. This equity should be financed by the State and managed by MIIF. This will automatically entitle Ghana to a share of production, beyond the Carried Interest (which counts for little), taxes, and royalties that accrue to the State, while ensuring access to foreign direct investment in the mine.
It must, again, not be lost on us, that, Ghana is pursuing the London Bullion Market Association (LBMA) certification to retain more value from its gold exports.
This effort is supported by the Ghana Chamber of Mines and Gold Fields, through its affilliate, Rand Refinery, working together to build the technical infrastructure required for domestic refineries to meet global standards.
The above and many other reasons underpin my call for caution in the handling of the Tarkwa lease renewal request.
Going forward, we must address the challenge of raising more domestic financial resources to support the mining industry. Our petroleum funds continue to be invested in low yielding instruments outside the country. Ato Forson wants to bring them home for on-lending to Ghanaian businesses and to support infrastructure development. It makes sense at this point, to revisit earlier plans to combine petroleum and mineral revenues into a unitary sovereign wealth fund, governed by a National Extractive Revenues Management Act, and part of the resources used to support Ghanaian businesses that operate in the extractive sector, not as gift, but as commercial loans to fund their operations.
In such a situation, Heath Goldfields, Adamus Resources, Damang, and to some extent, Asante Gold, all of them fully or partially-owned Ghanaian companies, will have access to some domestic resources to fund their operations. Even that, we will still require external financial resources.
To address the obvious political risks that may come with this proposition, the government should be required by law to hive off the business of lending and managing the loans to a private reputable financial institution through an open competitive process.
Again, giving the nature of our political settlement, and in the interest of mine sustainability, we should encourage the creation of a consortium of Ghanaian mining firms from across the political divide, to bid for mineral concessions. That way, the company will not be targeted in the event of a change in government.
Ne korakoraa ne sen? I’M FULLY IN FAVOUR OF INCREASING LOCAL PARTICIPATION IN MINING, BUT, IT MUST BE BASED ON STRATEGY AND NOT JUST SENTIMENTS.
By all means, let’s tone down the anti-investor rhetoric. We need FDI to complement what we are able to raise domestically.
THANK YOU
Dr. Steve Manteaw- Policy Analyst
