Mining and Quarrying
Ghana has a long and prosperous mining history. More than 100 years ago, it was one of the first countries in West Africa to explore gold mining. Today, Ghana produces over 2 million ounces of gold per year. Minerals make up 35% of the country’s export income. Gold is the major money-maker, with other minerals including manganese, bauxite and diamonds. Quarrying in Ghana consists mostly of smaller-scale operations that produce sand, gravel, cement, limestone, and granite. Large and small-scale mining operations provide an estimated 524,000 jobs for Ghanaians.
An estimated $6.7 billion was invested in Ghana’s mining and minerals sector between 1994 and 2008. This large influx of capital boosted the productivity of the industry, and led to $2.2 billion in gold exports in 2008.
In recognition of the significant contributions gold and mineral exports make to the Ghanaian economy, the government made mineral exploration and exportation a significant part of the Economic Recovery Programme (ERP). This programme introduced financial incentives and tax breaks for companies in the mining industry and set up institutions and regulations to oversee industry activities.
Over the past 80 years, many foreign companies have entered the mining and quarrying industry in Ghana. Today, some of the biggest players in gold mining include Anglo Ashanti, Golden Star, Newmont, Gold Fields, and Kinross. Major players in mining other minerals include Alkoa, Ghana Manganese and Consolidated Diamonds.
The Minerals Commission and the Ministry of Mines and Energy oversee the industry. In response to concerns raised by community leaders, NGO’s, and civil societies, the Minerals Commission and the Chamber of Mines organized a conference in 2004 aimed at bringing together industry stakeholders to establish best practices and develop corporate and environmental responsibility strategies. In 2009, the government signed into effect a set of mining laws that put in place regulations to alleviate environmental and public safety issues. These regulations have somewhat slowed the pace of growth in the industry, but they are ensuring the longevity and stability of mining in Ghana.
Mining and quarrying companies in Ghana face challenges when it comes to obtaining licenses and permits, land acquisition and community disputes. Often the process of exploration and setting up mining operations is slowed by these factors. Mining company operators must work closely with the communities in the area they intend to mine, and often face demands for financial compensation or investment in the community in order to gain access to mining areas. The Minerals Commission is intended to regulate this process and to assist mining companies with these issues and it does so to a limited extent. Some solutions have been put in place to alleviate the community issues, but it continues to be a problem for some companies.
Exploration takes mining companies to remote areas and setting up mining operations in these areas can be a challenge due to inadequate roads. Companies often have to mobilize their own power and water supplies to reach remote areas, which increases costs associated with exploring and setting up mining sites. Consequently, most of the gold and mineral exploration in Ghana is done by large international companies that can fund extended exploration endeavors.
The process of exploration becomes too expensive to go beyond the reconnaissance phase for most local companies, at which point they either have to partner with a larger company or seek financing from outside sources in order to continue their exploration. Such companies are good opportunities for investors looking to support local exploration efforts.
Investment in this area also creates jobs for the community, produces more skilled workers and creates opportunities for entrepreneurs. Local companies are looking for investors to provide financial assistance with setting up and maintaining mining sites throughout the country. There is also room for foreign companies to enter the industry on exploration missions and to set up their own facilities for extracting and refining minerals.
As big as the mining industry is in Ghana, gold and other mineral refineries are extremely limited. As recently as 2005, there were no refineries operating in Ghana. Still today, most of the minerals mined in Ghana are exported to foreign refineries, and are then imported again for local use and sale3. This is obviously a big drain on the local industry and significantly raises the costs of raw materials for Ghana’s other industries as well. Investment in the field of gold and mineral refinement would positively impact industries all throughout Ghana, from real estate and construction, to textiles and manufacturing. Building up mineral refineries in Ghana could also serve the gold and mineral producing countries surrounding Ghana that also lack infrastructure for mineral refinement1.
With increased construction going on in real estate and infrastructure development there is high demand for construction and industrial materials, such as granite, cement, sand, and rock. Because Ghana’s quarries produce large amounts of these materials, there is great opportunity for investment in this area. Most of the quarrying is done by smaller-scale local operations, many of which are seeking partners or financial assistance to improve their operations and increase their output. Many companies are interested in partnering with other small-scale operations or entering into joint ventures with new companies. Foreign entities also have opportunities to set up their own operations in this sector to supply the growing construction and infrastructure development industries.
Ghana’s mining industry enjoys many advantages that make it an attractive option for investors. Because Ghana has such a long history in the mining industry, there is a large pool of skilled and semi-skilled mine workers from currently operating and recently-closed mines. To date, the industry has a good safety track record and has solid systems in place to maintain personal and environmental safety. Also due to its long history and intense international interest, detailed, accurate information on Ghana’s mineral deposits (such as maps and satellite images) is readily available.
Recently there has been concern among foreign investors in the mining and mineral import industries regarding fraudulent gold and diamond deals coming out of Ghana and other African countries that have cost foreign companies millions of dollars. Recently it was reported that importers from the UAE were promised gold at discounted prices only to find out that the products they imported turned out to be fake. Investors and importers need to be aware of this, and are advised to avoid deals involving purchasing gold or diamonds at discounted rates and to only work with reputable firms. Investors should consult with authorized industry specialists and with local Chambers of Commerce to find reputable contacts. See Gold Fraud Guidance Page for more information on gold fraud.
Investment into Ghana’s mining and quarrying industries will help to make these already lucrative industries more efficient and more productive, ultimately increasing profits across the board. Now is a very exciting time to enter the mining and quarrying industry as market prices are high and Ghana’s gold, mineral and stone deposits run deep.