Interview : Eric Asubonteng
What attracts global investors to Ghana’s mines?
ERIC ASUBONTENG: Ghana is politically stable and abides by the rule of law. The positive from this is the ability to hold an active and honest dialogue with the government without affecting business. Indeed, the authorities have proven themselves to be willing and constructive partners by, for example, helping to establish the Precious Minerals Marketing Company (PMMC) as a national assayer, to ensure transparency and provide assurance to stakeholders. This is not to say we are without challenges in securing investment. Production and exploration costs remain high relative to the region, while rising labour costs and power supply are still areas of focus in the longer term. There is also public debate about the efficacy and appropriateness of the government’s 10% carried interest in mining.
However, Ghana has significant capacity for growth, which makes it an attractive investment destination. The domestic value chain, particularly in manufacturing, has not developed to take advantage of the mining value chain. The GCM has identified areas in which firms can excel in the captive market, including in caustic soda and activated carbon. There is significant demand and potential to produce these domestically, but expensive imports remain the only available option. The authorities also have a role to play in helping deepen this value chain. Beyond enacting laws and regulations, is fundamental to foster an enabling environment for business, with access to credit and training if need be.
How will the transfer of responsibility for gold assaying to the PMMC affect exports?
ASUBONTENG: There is an industry consensus that this is a positive development, not necessarily because we think the state-run PMMC will improve standards – as they are already very high – but rather due to the perception in Ghana and many other emerging economies that multinational mining firms operate in an opaque way. An extra layer of government visibility will help quash this perception. However, some challenges are likely to accompany this change, which industry is working with the PMMC to address. Notably, the operating framework will need to be updated to match increasingly advanced laboratory and testing processes.
This process will require assistance from the private sector, and a collaborative pilot scheme is already in place to ensure the smooth rollout. For example, PMMC staff are present in the gold rooms of producing member companies, stamping and sealing approved loads before they are exported. This helps check for variances and margins of error in reporting in an open and transparent manner. From an international perspective, this adds further clarity to Ghana’s gold exports, allowing not only international buyers and shareholders, but also non-governmental organisations and civil society groups, to make informed, data-driven decisions.
What potential do you see for gold mining in the under-explored Northern Region?
ASUBONTENG: While the vast majority of large-scale mining occurs in the southern regions, we must diversify our exploration to optimise the long-term utilisation of domestic resources, and geologically, northern Ghana is showing good prospects. Unfortunately, exploration is not occurring in any significant capacity, primarily due to two bottlenecks. The first is fiscal: exploration is costly, and there are very few incentives or government concessions to encourage development. Second, partly due to the legacy of colonialism, the south of the country already has infrastructure to support transport and exports, which encourages multiplier growth. Conversely, the north has yet to reach the same standard of infrastructure development. This presents a less attractive option to the private sector, which must keep costs below the global average to remain competitive. Ghana faces steep competition from neighbours such as Burkina Faso and Mali, so the public sector must help foster a competitive and enabling environment.
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