Mining is a key strategic industry for Ghana, and in 2022 the country was Africa’s largest gold producer and the 11th largest globally, generating an estimated 3.7m oz. Indeed, gold regularly accounts for nearly half of gross merchandise exports. Ghana also has commercially exploited deposits of manganese, bauxite and diamonds, with these being joined by new lithium project developments.
The industry is also a major employer – both officially and unofficially. The sector is composed of two main categories of producers, Artisanal and smallscale mining (ASM) and large-scale mining (LSM) operations. ASM is estimated to employ around 1m Ghanaians directly, while about 4.5m more are employed in ASM’s upstream and downstream industries. An ASM is defined as an operation on less than 25 ha. Meanwhile, large-scale mining (LSM) directly employed around 12,000 people in 2021.
In 2023 the industry was undergoing important changes. Determined to support more in-country, higher-value processing and manufacturing, the government has been reforming regulations on raw material exports. The authorities are also continuing to tackle the destructive impact of illegal mining while boosting community engagement.
Oversight
The principal government body for Ghana’s mining sector is the Ministry of Lands and Natural Resources (MLNR). Under a 1993 law, the ministry is mandated to efficiently manage the country’s mineral resources to encourage socio-economic growth and development.
A series of government agencies oversee the mining sector under the purview of the MLNR. These are led by the Minerals Commission (MC), which was created in 1993, while other agencies include the Ghana Geological Survey Authority, the Precious Minerals Marketing Company (PMMC), the Minerals Development Fund, the Ghana Integrated Aluminium Development Corporation, and the Ghana Integrated Iron and Steel Corporation. The MC was established by a 1993 act and given the task of dayto-day administration of the sector, while advising the minister of the MLNR on mineral policy and the granting of mineral rights.
In addition, the Environmental Protection Agency (EPA), the Forestry Commission and the Water Resources Commission have important roles in the environmental regulation of the sector. The fiscal side also involves the Ministry of Finance, the Ghana Revenue Authority and the country’s central bank, the Bank of Ghana (BoG).
Ghana’s sovereign wealth fund, the Minerals Income Investment Fund (MIIF), is another key institution for the industry. Wholly government owned, the MIIF was created in 2018 to receive, manage and invest the royalties and other related income due to the state from mining operations. The MIIF also conducts a mining surveillance project, determining the precise location of all mining activities, and creating both a baseline and a tool for understanding the status of the sector across the country (see analysis).
Key Players
Professional bodies operating in the extraction industry include the Ghana Chamber of Mines (GCM), a voluntary private sector body that dates back to 1903. The largest labour organisation in the sector is the Ghana Mine Workers Union, which had approximately 16,000 members as of September 2023. There are also numerous support service organisations working alongside miners, including outfits such as construction and drilling company MKCL and laboratory testing and certification firm SGS Ghana. The GCM primarily represents LSMs, rather than ASMs. All registered ASMs are represented by the Ghana National Association of Small-Scale Miners (GNASSM).
Unregistered, or illegal, mining operations – known as galamsey, which is derived from “gather them and sell” – have been the subject of many eradication campaigns over the years. However, galamsey continues to negatively impact communities and the environment in many of the 16 regions.
Legal Frameworks
A series of laws govern the sector, with these hinging on the Minerals and Mining Act of 2006. Current policy is set by the 2014 Minerals and Mining Policy of Ghana. Another key regulation is the 2020 Legislative Instrument 2431 on Minerals and Mining, which sets requirements for local content and participation. Under this regulation, owners of mining licences are required to establish localisation programmes with the ultimate goal of increasing the recruitment and training of Ghanaians in the sector. Target levels and requirements for the purchase of domestic goods and services are also set, while licence holders can be obliged to list a minimum of 20% of their equity on the Ghana Stock Exchange.
Mineral rights are granted by the government to private parties, with surface rights sometimes held by separate entities. Three types of mining licences exist – reconnaissance, prospecting and mining – although variants of each type are also available. ASM licences are only available to Ghanaian citizens, while LSM licences are only granted to firms with local incorporation. Reconnaissance licences usually run for 12 months and may be extended once for a further 12 months. For prospecting, the periods are three years, and for mining 30 years. The MLNR may cancel a mining licence if there has been no activity for two years. The government is also entitled to a 10% free carried interest in the rights and obligations of mineral mining operations.
In addition, there is a surrender requirement, under which mining organisations must return a proportion of the foreign exchange revenue they receive for overseas sales to Ghana. This has sometimes been sold on to commercial banks, but since 2022 has primarily gone to the BoG. In addition, 2022 saw firms sell a proportion of their gold output to the central bank in return for Ghanaian cedi under the Domestic Gold Purchase Programme.
Dispute resolution is covered by the Minerals and Mining Act of 2006 and conforms to international standards. The MLNR may also enter into a stability agreement with a mining organisation, thereby guaranteeing it will not be adversely affected by any subsequent changes in the law.
In response to recent increases in oil prices around the world, a further regulatory change came with the launch of the Gold for Oil programme in January 2023. This initiative obliges ASMs to sell all of their gold to the government, via the PMMC, with purchases funded by the BoG. LSMs, for their part, sell gold directly to the BoG. The PMMC has a purchase target of 160,000 oz per month. This figure is worth around $300m at 2023 prices.
A forthcoming regulation of note is the green minerals policy, approved by the Cabinet in late July 2023 and expected to become law by the end of the year. The policy concerns minerals that are vital to the energy transition, such as lithium, manganese and bauxite, and forbids their export in a raw state.
Gold
The largest of Ghana’s mining segments by value, gold is the country’s single biggest export earner. Indeed, the industry was responsible for 96.9% of all mineral export revenue in 2022 and constituted 39% of total merchandise export revenue.
Most gold is produced by LSMs, which were responsible for 82.4% of production in 2022, with ASMs accounting for the remaining 17.6%. The ASM figure was up significantly on the roughly 3% recorded in previous years due to a 2022 government decision to halve the withholding tax on gold exports by ASMs from 3% to 1.5%.
Ghana’s main gold mining region is the south-west, where the Ashanti and Sefwi belts have historically been very productive. Other areas thought to hold potential lie in the centre-west and north-west, with much of this territory yet to be explored.
In 2022 Ghana became the largest recipient of planned exploration expenditure in West Africa, with some $114m budgeted. Key mines include Abosso Goldfields’ Damang mine, Gold Fields Ghana’s Tarkwa mine, AngloGold Ashanti’s Obuasi and Iduapriem concessions, the government-owned Prestea Sankofa mine, Newmont’s Ahafo and Akyem mines in Ashanti, Asanko Gold Ghana’s Asanko gold mine, Perseus’ Edikan mine, Cardinal Resources’ Namdini project and Kinross Gold’s Chirano mine.
Downstream, Ghana is home to the second-largest refinery on the continent: the Gold Coast Refinery in Accra. The facility has a capacity of 480 kg of gold per day and is a subsidiary of the Euroget Group. The Sahara Royal Gold Refinery, which is also in Accra, is the country’s second such facility, while a third, Royal Gold Ghana, was launched in 2022 on the same premises of the PMMC.
Diamonds
In contrast to gold, all diamond extraction is undertaken by ASMs, with the country producing around 82,300 carats in 2022, up from 54,200 in 2021 and 26,500 carats in 2020. Ghana is signed up to the Kimberley Process, which is administered in Ghana by the PMMC. It examines all diamonds before export to ensure that none have been illegally obtained. Diamond mining has historically been concentrated in the Birim River field.
Industrial Minerals
Manganese has been exclusively mined at the 170-sq-km Nsuta mine, run by the privately owned Ghana Manganese Company (GMC) since 1916. There are also deposits of manganese in the south Bole District and in Dixcove.
In addition, Ghana his home to the second-largest reserves of bauxite in Africa, with significant deposits located in the Awaso, Nyinahin and Kibi regions. Like the GMC, the Ghana Bauxite Company (GBC) is the country’s sole producer, with its mine in Awaso in operation since the 1940s.
Salt is expected to play a major socio-economic role both in Ghana and the wider region. “The increase in domestic salt production will therefore contribute to the local economy by boosting exports to neighbouring countries in the region and reducing Ghana’s dependence on chemical imports,” Kwaku Ampromfi, CEO of McDan Group, told OBG.
Lithium
A key mineral for the green industrial revolution, lithium was discovered in Ghana in 2018, with the first lithium mine – Atlantic Lithium and Piedmont Lithium’s Ewoyaa Lithium Project – announcing a definitive feasibility study in June 2023. The mine is part of Atlantic Lithium’s Cape Coast lithium portfolio, which includes a further prospect, Egyasimanku Hill. Production at the mine is expected to commence in 2025, with a 2.7m-tonne-per-year spodumene mining operation slated to last 12 years. In September 2023 the MIIF announced it was investing around $33m in Atlantic Lithium to support the Ewoyaa Lithium Project, and would take a 6%, $27.9m stake in the firm’s Ghana projects (see analysis).
Performance
The most recent figures from Ghana Statistical Service for the mining and quarrying sector’s contribution to overall GDP show a significant increase, from 4.5% in 2021 to 7.6% in 2022. The 2022 figure is, however, more in keeping with recent results, with 2021 seeing a downturn resulting from Covid-19-related restrictions and associated declines in output.
In 2022 the gold segment as a whole produced 3.7m oz, up from 2.8m oz in 2021. Exports totalled 656,000 oz in 2022, worth some $6.6bn in export revenue. Total export revenue from minerals reached $6.8bn. This demonstrated the dominant share taken by the gold industry in a year when international gold prices first increased to a high of $2039 per oz in April, on the back of Russia’s invasion of Ukraine, before easing as the year continued to finish at $1814 – a similar level to where 2021 ended.
According to PMMC data, diamond exports amounted to 82,252 carats in 2022, up 52% from the 2021 figure of 54,174 carats. This was due to the ongoing success of the Kimberley Process registration, which has brought more of the diamond segment under regulation.
In terms of manganese, the GMC Nsuta mine produced some 3.2m tonnes in 2022, a 5% reduction in output from 2021. This was due to a drop in the volume of ore mined for operational reasons. Similarly, production of bauxite by the GBM was 773,000 tonnes in 2022, down from 1m tonnes in 2021.
Ghana has continued its efforts address the issue of illegal mining, which continues to bring challenges to many areas of the country. In 2022 the National Food Buffer Stock Company said that galamsey had negatively impacted some 19,000 ha of cocoa plantations between 2021 and the first six months of 2022. Low rural incomes and a lack of job opportunities, along with recent high inflation, are some of the challenges that make this a continuing issue. Formalising the ASM segment continues to be a key government strategy against illegal mining, though there has also been periodic military intervention to shut down illegal operations.
Outlook
Based on the direction of government policy to boost local value-added in the mining sector, the coming years are likely to see further focus on the downstream segment. New, critical mineral industries in particular are likely to ensure that a different model is followed from the historical practice of raw material extraction and export.
At the same time, in traditional industries such as gold, the ASM segment will continue to expand its share while also pushing overall production upwards. While this is partly due to success in increased regulations for small miners, efforts to curb illegal mining are also key to the sector’s growth, given the negative effects of illegal mining on agriculture, forestry, health and environmental sustainability.
Ghana has achieved much in recent years, establishing regulatory frameworks returning to growth following the pandemic. With a pre-eminent position among Africa’s mining players, the country is set to be an investment destination in the years to come.
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