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a

Report

Mining in Ghana
What future can we expect?

Mining: Partnerships for Development


July 2015

Foreword

Executive summary

Introduction and methodology

10

Abbreviations

12

1. Ghanas economy and the role of mining

13

1.1 National profile


1.2 The mining sector

2. Macroeconomic life cycle contributions of mining


2.1
2.2
2.3
2.4

Life cycle projections of the mining sector


Minings impact on value added
Minings impact on employment
Scenario analyses

3. Local views
3.1 The different stakeholder groups
3.2 Key findings

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17

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27
32
37
39

43
44
45

4. Emerging priorities for action

49

References

53

Annexes

57

Annex
Annex
Annex
Annex
Annex

A: Input-output methodology
B: List of stakeholders interviewed
C: Workshop details
D: Key policy developments in Ghanas mining sector
E: The mine project life cycle

Acknowledgements

Cover image courtesy of The Ghana Chamber of Mines

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Foreword

The history of mining and its economic significance to the


people of Ghana stretches over a century. However, the
narrative and literature on the mining sectors contribution
to economic progress have often been woven around
descriptive and spot data. Even though this provides useful
historic information on the benefits of mining, it stymies
efforts to premise policy decision making on robust analysis.
It is a
well-recognized fact that a comprehensive understanding
of the life cycle contribution of mining is fundamental to
realizing the shared objective of maximizing the spectrum
of benefits induced by the presence of the mine.
In recognition of this challenge, the Chamber collaborated
with the ICMM to undertake a watershed research on the
life cycle contribution of mining to the economy of Ghana.
This project comprises both historic and forward looking
data from seven mining operations in Ghana, namely, Gold
Fields Tarkwa, Gold Fields Damang, Newmont Ahafo,
Newmont Akyem, Golden Star Wassa, Adamus Resources
and Chirano Gold Mines. I wish to express profuse
appreciation to the representatives of the fore-cited
companies who cooperated with the researchers in supplying
the requisite data. As well,
I am equally grateful to the various stakeholders that
volunteered information towards the successful
completion of this seminal project.
The findings of the research undertaken by Steward
Redqueen and African Center for Economic Transformation
(ACET) do not only underscore the direct benefits of mining
but also the numerous value multipliers generated by the
economic activity. Particularly, it empirically demonstrates
how local purchases in the mining sector could be
leveraged to catalyze industrial growth as well as spur the
creation of new wealth. In the long run, this outturn is
expected to enhance economic development and well-being
of the population. Over and above the recommendations
proffered by the researchers, stakeholders were also given
the opportunity to comment on the findings. These have
been incorporated into the report as part of the blueprint
measures that would be spearheaded by the Chamber and
its stakeholders.
I am confident that every reader would find this report,
which is a good blend of academia and industry, exciting and
insightful. No doubt, it would have far-reaching positive
impact on the sectors policy landscape and engagements
among stakeholders.

Sulemanu Koney
Chief Executive Officer, Ghana Chamber of Mines

Mining
in Ghana
What future
can we expect?
Mining:
Partnerships
for Development

Ghana is often cited as an established mining nation and one


of Africas fastest growing economies. This report brings out
another quality in Ghana a country that is planning for its
future.
As far back as 2006, ICMM was invited to help Ghana to bring
together the government, mining companies, civil society,
mining communities and others who have the capacity by
working together to make a solid, global mining industry
that will contribute to the economy and the society.
In the decade since, mining has been an important part of
Ghanas macroeconomic progress. Even with a cyclical
drop in the price of gold, mining still accounted for 19 per
cent of all direct tax payments in Ghana in 2013. But the
continued declining revenues for commodities globally
through 2014 mean that the industry faces real challenges
that can partly be mitigated by strong relationships with
host countries.
While there is a clear positive impact of mining on the
national economy of Ghana, at the local level, more could be
done for communities to benefit from the mining industry
for example, through local procurement. As the report
highlights, although large-scale mining is a capital intensive
industry that creates relatively few direct jobs, the industry
creates far more indirect jobs in local supplier businesses
which is a direct benefit to the whole community.
This report shows that about half of the mining company
expenditures that remain in Ghana relate to local
procurement while the other half is direct value added (the
sum of salaries, taxes and profits that accrue to Ghanaian
residents or entities). If it were possible to increase local
procurement by 25 per cent across certain categories,
the value added to the economy would increase by about
US$50 million annually, and indirect employment would
be even further increased.
There is a tremendous desire to find a way forward that truly
maximizes the contribution that mining can make to long
term social and economic development. As this report
concludes, there are five emerging priorities for action,
including the implementation of a national action plan to
increase local procurement and linkages.
ICMM is committed to continuing to support the process,
but it will be the stakeholders in Ghana government,
communities, companies who must take up the challenge
of addressing these priorities to make real progress.

Tom Butler
Chief Executive Officer, ICMM

MiningMining:
in Ghana
What future
we expect?
Partnerships
for can
Development

Executive summary

About Mining: Partnerships for Development


ICMMs Mining: Partnerships for Development (MPD)
initiative focuses on enhancing minings economic and
social contribution. It supports the formal commitment
made by ICMM member companies to actively support or
help foster multi-stakeholder development-focused
partnerships in countries where they are active.
Mining is economically critical for millions of the worlds
poorest people with some 50 countries being significantly
dependent on mining. Yet mineral wealth does not always
mean positive economic growth the so-called resource
curse theory.
In 2004, ICMM began the Resource Endowment initiative in
collaboration with the United Nations Conference on Trade
and Development (UNCTAD) and the World Bank Group.
It developed a substantial body of research on why some
countries have avoided the resource curse and
developed practical actions for companies, governments
and civil society. It was overseen by an independent
international advisory group, including the head of the
United Nations Global Compact and a former prime
minister of Senegal.
The Resource Endowment initiative showed that the
resource curse is not inevitable. Mining investments can
drive economic growth and reduce poverty nationally
and locally. However, companies alone cannot unlock the
development benefits from mining governance is key
and multi-stakeholder partnerships can help fill capacity
gaps. The findings were based on the application of ICMMs
Resource Endowment Toolkit (April 2006) in four countries
Chile, Ghana, Peru and Tanzania.
The toolkit has now been revised, extended and republished
as the Mining: Partnerships for Development Toolkit (ICMM
2011). It responds to a clear need in different parts of the
world for a more systematic and objective way to quantify
and agree ways to enhance minings economic and social
contribution.
It is currently being applied in a number of countries
and can be used by mine managers and those interested
in promoting economic and social development (host
governments, development agencies and developmentfocused non-governmental organizations (NGOs)).
For more information, visit www.icmm.com/mpd or
email us at info@icmm.com.

About this report


The purpose of the report is to provide an independent and
objective evidence base regarding minings past, present
and possible future contributions to the Ghanaian economy
and society.
The report assesses the economic contributions of
mining in Ghana and explores how these might be
enhanced.
The report does this by presenting the findings of applying
the life cycle model (Module six) of ICMMs MPD Toolkit to
Ghana. The work has been commissioned by ICMM and
the Ghana Chamber of Mines and has been conducted by
Steward Redqueen and ACET. This is a follow-up report to
the Ghana country case study (ICMM 2007).
The report is presented in four sections:
Section 1: Ghanas economy and the role of mining
Section 2: Macroeconomic life cycle contributions of mining
Section 3: Local views
Section 4: Emerging priorities for action.
It should be noted that the life cycle company data is based
on historic data beginning in 2010 and planned production
figures from 20142022 from a sample of seven mining
operations. These projections are based on expenditures that
are presently authorized and exclude the ones that may be
authorized or revised in the future. In addition to not
including any new projects that may come on stream in the
future, the sample data does not include exploration, and
therefore the decline in projected gold production is not
necessarily a trend for the entire gold mining industry.
At the start of this study the majority of the sample of mining
companies based their projections on a US$1,300 per ounce
gold price, and consequently the companies who did not work
with that price adjusted their projected financials accordingly.
Projections show the minimum expected contributions of
the sample of mining companies under this gold price,
assuming that international and national policy conditions
remain broadly as they are now. Therefore the results
presented in this report are not forecasts but rather an
illustration of what the future may look like for this sample
of seven mines.
The seven mines that provided data for the life cycle
analysis are:
Adamus Resouces
Chirano Gold Mines
Gold Fields Damang
Gold Fields Tarkwa
Golden Star Wassa
Newmont Ahafo
Newmont Akyem.

Executive summary

Section 1
Ghanas economy and the role of mining
The mining sector plays an important role in the Ghanaian
economy as it attracts more than half of all foreign direct
investment (FDI), generates more than one-third of all export
revenues, is the largest tax-paying sector in the country and
makes a significant contribution to gross domestic product
(GDP) and employment creation.
National profile
Buoyed by high commodity prices, the advent of oil
production and related investments in mining and oil,
Ghanas economy grew from its average of 6.5 per cent
in the 2000s to 15 per cent in 2011 (non-oil GDP growth
in
2011 was about 8 per cent) before slowing down to about
7 per cent in 2013. This is comparatively higher than the
sub-Saharan African average growth rate of 4.2 per
cent in 2013.

Executive summary

The Government of Ghana still plays an important role in the


mining sector. Looking at all policy developments in the
sector over the last decade, it shows that the Government of
Ghana is increasingly focusing on regulating and promoting
small-scale mining and strengthening the collection,
transparency and management of mineral revenues. In 2012
alone, six mining laws and regulations were passed.
These policy revisions have proven successful. In 2013, over
50 per cent of FDI in Ghana was related to the mining sector.
The mining sector contributed significantly to Ghanas overall
export and tax revenues: 37 per cent of export revenues
were attributable to mining and the sector was responsible
for 19 per cent of all direct tax payments in Ghana.
This clearly indicates the significant importance of mining in
Ghana, which is also reflected in minings contribution to
GDP and direct employment, respectively 1.7 per cent of
Ghanas GDP and 1.1 per cent of the Ghanaian labour force.

Despite Ghanas sustained economic growth, some


challenges remain for the country. Ghana faces budget
deficits and rising debt-to-GDP ratios, suffers from
persistent trade and current account deficits and
employment growth has not matched the impressive
GDP growth.
In terms of social performance, Ghana is performing well
in comparison to other sub-Saharan African countries.
Ghana is ranked 13th out of 52 African countries in the
Human Development Index in 2013, is the best performing
country in sub-Saharan Africa on the Global Hunger
Index and ranks seventh out of 52 African countries on the
Ibrahim Index of African Governance.
The mining sector
There is a very long history of mining in Ghana.
The commercially exploited minerals in Ghana include gold,
manganese, bauxite and diamond of which gold is by far the
largest, contributing over 95 per cent of the countrys total
mineral revenue. Today, Ghana is Africas second largest
gold producer after South Africa.
Prior to 1983, most Ghanaian mining production was state
owned, but since the Economic Recovery Program, Ghana
has attracted foreign investments and pushed towards
privatization and state divestiture. The sector is now
largely foreign owned, but the Government of Ghana still
holds a minority (10 per cent) free carried interest in most
of the main active large-scale mines. The small-scale
mining industry is reserved for Ghanaians.

The mining sector attracts


more than half of all foreign
direct investment,
generates more than onethird of all export revenues,
is the largest tax-paying
sector
and makes a significant
contribution to GDP and
employment.

Section 2
Macroeconomic life cycle contributions
of mining
For the first time, this report presents a picture of
macroeconomic contributions from the large-scale gold
mining industry in Ghana, using historical and current data
as well as projections provided by a number of Ghanas
largest mining companies. The seven mines which provided
life cycle data to this study together represent over 71 per
cent of the large-scale gold mining sector. Throughout this
report, all references to the mining sector or to large-scale
gold mining refer solely to this sample of seven mines.
In order to show the current and potential impact of mining
in Ghana, the report documents direct and indirect value
added (sum of salaries, taxes and profits that accrue to
Ghanaian residents or entities) and employment
contributions in Ghana between 2010 and 2022. The direct
contributions are based on the data provided by the sample
of mining companies and the indirect contributions are
based on input-output modelling (see Annex A).
Life cycle projections of the mining sector
The data provided by the sample of seven mines comprises
life cycle projections on sales volume and revenue, capital
expenditure (capex), operational expenditure (opex), social
investments, tax payments, mine closure costs and
employment figures. It should be noted that the life cycle
projections include what the sample of mining companies
planned for production in the beginning of 2014, are based
on a US$1,300 per ounce gold price and it is assumed that
international and national policy conditions remain broadly
as they are now.
Since 2010, the mining sector has increased production
volumes, but from 2014 onwards projections using the
sample data see production decreasing by an average
of
4.6 per cent per year. This decline in production reflects
genuine reductions in production due to the life cycle
stage of the mines in the sample (see Annex E), but is also
because a low gold price constrains mine extension plans.
Declining volumes and lower gold prices (compared to the
all-time high in 2011) bring about lower revenues and
expenditures. This diminishes the incomes for both mining
companies and the Government of Ghana, although the latter
receives a greater share. The data shows that over the
period
201022 the Government of Ghana is expected to receive
about US$1.6 for every dollar of company profits (profits
accruing to mining companies after all statutory obligations
are satisfied).

The sample of seven mines


directly contributed
US$796 million to the
Ghanaian economy in 2013.
Once the indirect impact of
the mines expenditures on
goods and services in the
supply chain is taken into
account this figure rises to
US$1,556 million.

In addition to government payments and company profits,


other expenditures contribute to value added and positively
impact the Ghanaian economy. The wages, social investments
and supplier expenditures that are spent in country, which
are about half of total expenditures, impact the Ghanaian
economy indirectly. The next section considers the
significance of the indirect effects.
Minings impact on value added
The sample of seven mines directly contributed US$796
million to the Ghanaian economy in 2013. Once the indirect
impact
of the mines expenditures on goods and services in the
supply chain is taken into account this figure rises to
US$1,556 million, equivalent to 3.2 per cent of Ghanas
GDP. By projection, in 2022 a total of US$940 million will be
supported directly and indirectly by the seven mines,
equivalent to 1.3 per cent of Ghanas GDP.
The life cycle data from the sample of mining companies also
shows that about half of the expenditures that remain in
Ghana are local procurement (25 per cent of total
expenditures are local procurement) and the other half are
direct value added (wages and payments to the government).
If it were possible to increase the percentage of procurement
spend that is local, Ghana would benefit significantly.
Our scenario analysis shows that value added to the
Ghanaian economy could increase by approximately
US$50 million annually based on the assumption that certain
categories of local procurement increase by 25 per cent, the
gold price remains competitive and all other things remain
equal.

Not all local procurement can be translated into value


added. About 20 per cent of local procurement, which
drives
the indirect effects, is lost to the Ghanaian economy due
to subsequent imports by direct and indirect suppliers.
This means that for every US$1 spent on local
procurement about US$0.80 is value added.
Minings impact on employment
Whereas most value added is supported directly by the
mining companies, most jobs are actually supported in
their value chain through supplier expenditures and the
re-spending of salaries. On average the sample of mining
companies employ annually about 7,000 people directly
while in total about 111,000 jobs are supported. This means
that for each job at the mine site an additional 15 jobs are
supported in the wider economy. Comparing that to local
procurement, it means that for each US$1 million of local
procurement about 105 jobs are supported.
High value added and relatively few employees result in
high-quality jobs. The sample of mining companies add most
value per job (US$85,000 per job) and the sectors more
closely related with the sample of mining companies are all
substantially above the national average of US$4,400 in 2013.
Sectors further away from the mining companies, especially
agriculture (US$2,200), are more often operating in the
informal economy and therefore value added per job is
lower.

Section 3
Local views
To obtain local views on the impact of the mining sector on
the economy, and especially on mining communities and
livelihood alternatives, we engaged with 91 stakeholders.
The majority of the stakeholders interviewed were
community-based organizations and the others were from
national institutions.
Most community stakeholders hold the view that the
large-scale mining companies have contributed noticeably
to increasing overall economic benefits. Especially they
note that the sector has a positive impact on employment
and that business opportunities have opened up. Although
communities see positive economic opportunities, survey
respondents from national-level institutions perceive only
limited economic opportunities. The general observation
of this group is that while there has been an increase in
business opportunities for locals, jobs have been mostly
low paid, with limited upward mobility, and local businesses
have limited capacity to execute contracts offered by the
mines.
Apart from economic effects, stakeholders from the
communities also acknowledge that they have become
more dependent on social amenities provided by the mining
companies such as water supply and sanitation facilities,
library construction, and school scholarships. The impact
of these social investments has been largely uniform
across gender and by generations for the simple reason
that improvements in social amenities are generally shared
community goods.
Although environmental issues were outside the scope of
the study, without exception stakeholders highlighted the
negative impacts on the environment as a whole. These
include land use and water issues. The community
stakeholders were, however, unable to determine how
much of these environmental impacts could be attributed
to large-scale mining companies and how much to the
increasing activities of artisanal and small-scale miners.
It was generally acknowledged by national level
stakeholders (and backed by Environmental Protection
Agency data) that most adverse environmental impacts of
mining cannot be attributed to large-scale mining but to
unregulated artisanal mining and to a lesser degree
small-scale mining.

Section 4
Emerging priorities for action
Based on our analysis and stakeholder dialogue at a large
multi-stakeholder workshop in April 2015, there are five
emerging priorities for action. In order for these to be taken
forward, a forum to collectively identify concrete actions
and agree roles, responsibilities and timelines for tackling
them in a collaborative manner would be a useful first step.
Within the partnership arrangements that are identified,
there will be distinct roles for government agencies, the
Chamber of Mines, mining companies, mining industry
suppliers, development partners and CSOs (the latter two
being particularly relevant in the capacity building space).
1. Improve mining policy framework
Ghanas mineral policy has remained in a draft form since
1999. Sustained pressure from civil society organizations
and related stakeholder groups led to cabinets ratification
of the policy in December 2014. Whilst waiting for the
Minerals Commission to launch the policy, one can only
speculate that the key policy pillars are consistent with
the provisions of existing legislation. The mining policy
framework should be clearly defined and linked to the
countrys development plan. Although putting in place an
explicit mining policy does not necessarily guarantee good
legislation, it provides discipline for the legislative and
regulatory framework and guidance for the behaviour of
all stakeholders.

Linked to a broader industrial


development policy, increased
local procurement in targeted
sectors could contribute to
economic diversification and
growth.

2. Provide greater clarity on the management and use of


mineral revenues
Closely related to the broader mining policy is the need for
public conversation on how Ghana intends to manage and
to share its mining revenues to enhance socioeconomic
development. The current treatment of mineral revenues as
part of general revenues dilutes the important contribution of
mining in the eyes of the public, and does not recognize the
need to convert mineral revenues into long-term physical
and human capital. The implementation of mineral revenue
legislation similar to that which exists for the petroleum
sector, (which defines the rationale and the formula for
sub-national distribution), will provide the opportunity to
improve transparency, accountability and efficient use of the
finite revenue flows from mining.
3. Develop a comprehensive national action plan for more
local procurement
Linked to a broader industrial development policy, increased
local procurement in targeted sectors those sectors
transferable to nascent or not yet developed sectors of the
Ghanaian economy could contribute to economic
diversification and growth. The presence of mining actually
represents a window of opportunity for Ghana to diversify
through its efforts to increase local procurement. However,
building such linkages requires co-ordination and positive
collaboration at a macroeconomic, regional (industrial
cluster) and firm level. This requires an appropriate platform
to share information on opportunities and obstacles for
more local procurement, agree on a shared vision and
strategy, monitor progress and make any necessary
corrections to
the national action plan for more local procurement.
The mining industry should continue to collaborate with
government in the detailed assessment of items that are
feasible to be produced in Ghana. There is also an
opportunity for companies to co-ordinate efforts to build a
portfolio of companies that are well placed to meet the
aggregate demand of the industry. Part of this industry
effort
will be to work with local business to improve the quality and
service delivery of their products over time to meet the
standards of the mining industry.
4. Develop a strategic framework for social investments
and align it with local authority spending
The life cycle analysis for the seven mines shows that social
investments are likely to decline. This demonstrates the
imperative for mining companies to develop a strategic
framework for their social investments in such a way that
they contribute to development to the fullest extent possible
and align with other company contributions and with
government spending. This point is reinforced by the survey
results whereby stakeholders from the communities
acknowledge that they have become more dependent on
the public services made available by mining companies
through their social investments.

A first step to achieving better company and government


alignment will be for the Government of Ghana to clearly
define the role of local governments in the provision of social
goods and services. This will enable mining companies both
collectively and individually to begin to align their social
investments with local authority spending plans, as well as
taking a strategic view of these investments for example,
prioritizing those which nurture small local enterprises.
Helping to develop the local private sector through small
enterprise development creates additional jobs and
generates incomes that will help communities become
self-sustaining. Development partners can play a role in
this by providing a platform for information sharing, project
identification and monitoring progress.
5. Build capacity with different stakeholders
From our analysis and the outcomes of the multistakeholder workshop, there are several areas where
capacity can be enhanced. A first example is within
government institutions, whereby a focus on logistics and
enhanced training will better enable the monitoring and
tracking of mineral
revenues as dictated by the sub-national distribution formula.
Secondly, the mining industry has an opportunity to be more
proactive in communicating its contributions and impacts to
all stakeholders, as well as managing expectations. This will
enhance mining communities understanding of the
mining industry, including mining processes, the mining life
cycle, legal rights of communities and how mining companies
contribute to social and economic development through
heir core and voluntary investments and activities. A third
example is the need to provide management, finance and
operational training to entrepreneurs and small businesses
in order that they are able to develop products and services
that meet the requirements of the mining sector and beyond.

The current treatment of


mineral revenues as part of
general revenues into the
consolidated fund dilutes the
important contribution of
mining in the eyes of the
public, and does not recognize
the need to convert mineral
revenues into long-term
physical and human capital.

Introduction and methodology

In 2007, ICMMs MPD Toolkit was applied


in Ghana. The resulting Ghana country
case study (ICMM 2007) provided an
objective assessment of the positive and
negative socioeconomic impacts of mining
in Ghana at the national and local level.
The report suggested that there is
potential to enhance minings contribution
to economic and social development in
Ghana. The findings were discussed at a
workshop in Accra in 2008 (ICMM 2008).

Introduction and methodology

In 2014, ICMM undertook a desk-based review of existing


initiatives in Ghana and agreed with the Ghana Chamber of
Mines that applying the life cycle module (Module 6 from
the MPD Toolkit) in Ghana would bring benefits to all
stakeholders by enhancing the common understanding of
the long-term future economic contribution of mining to
Ghana. This module was not applied in the original toolkit
application.
This report presents the findings of the life cycle module that
has been applied by Steward Redqueen and ACET. The study
shows the macroeconomic contributions of mining on the
national level over the life cycle 201022. These contributions
are based on life cycle data made available by seven mines
in Ghana. Scenarios are also applied to the aggregated data,
which can be used to inform current and future policy
debates on minings contribution to social and economic
development.
Methodology
The study was conducted over a period of nine months, from
July 2014 to March 2015. In this period, Steward Redqueen
and ACET collected data from secondary sources, mining
companies and government ministries, and aggregated and
processed that data in such a way that both minings direct
and indirect life cycle impact can be shown.
The framework in Module 6 of the ICMM MPD Toolkit allows
us to show the direct contributions of mining by considering
production levels, capital investments, tax payments,
employment and community investments projected into the
future. It should be noted that the projections are based on
investment spending that is presently authorized and exclude
any additional capital spending that is likely to be authorized
in the future.

Box 1: About input-output modelling


Simply stated, an input-output model provides a road map
of an economy and shows the interrelationship between
various sectors. Financial data provided by the sample of
mining companies is run through the model to see how
revenues and expenditures affect other economic sectors
and generate income. From this analysis, we can derive
minings direct and indirect impact on value added, which
is the sum of salaries, taxes and profits that accrue to
Ghanaian residents or entities, and on employment.
As indicated, this approach allows us to show the impacts,
respectively the direct impact from the mining companies,
the impact from direct suppliers of the mining companies,
the impact from suppliers suppliers and the impact that
stems from the re-spending of salaries earned by mining
company employees and all employees in the supply chain.
See Annex A for more details on the methodology.

In order to show the indirect contributions of mining,


Steward Redqueen applied input-output methodology
(see Box 1 and Annex A for more details). In order to
analyze the contributions under different scenarios,
assumptions were used (see Section 2.4) to adjust the life
cycle data provided by the mining companies and this
adjusted data
was used in the input-output analysis.
In addition, ACET interviewed key stakeholders in the mining
sector to gather local views on the mining sectors impact
(see Annex B for more details), and this enabled the
quantitative findings to be complemented with more
qualitative statements. To engage with stakeholders and
receive feedback on the findings of this report, a workshop
was held in April 2015 (see Annex C for more details). The
feedback from the workshop has been incorporated in this
report.
Data
The data used to complete the study is from a variety of
sources. Relevant secondary sources are used throughout
the study, but most sections rely on information provided by
the government or mining companies. National data sources
were prioritized first in the process of gathering the data,
before filling the gaps with international data where needed.
Sections 1.1 and 1.2 are based on data largely drawn
from national sources such as the Ministry of Finance,
Ghana Statistical Service (GSS), Bank of Ghana, Minerals
Commission and Ghana Revenue Authority but is
complemented with some additional international data.
Section 2.1 aggregates the life cycle data provided by the
sample of mining companies. For the period 201022, this
included data on metal production by volume and sale
value, expenditure breakdowns, expenditures made in
Ghana, government contributions and employment.
In agreement with the mining companies, extrapolation
has been used to fill data gaps.
Sections 2.2 and 2.3 are based on company life cycle data
and macroeconomic data necessary to run the input-output
analysis. Sector-specific GDP and labour force estimates
were obtained from the GSS. The input-output model of
the Ghanaian economy has been constructed using data
from the Global Trade Analysis Project (GTAP) 8 Data
Base (Global Trade Analysis Project 2012).
Section 2.4 shows the possible future contributions of
mining under different scenarios. The life cycle data
provided by the sample of mining companies has been
adjusted to reflect the new situation by applying some
general assumptions. The applications of these
assumptions aim to help illustrate possible future
outcomes, but are by no means certain forecasts.
Section 3 uses data from the stakeholder surveys that
were held. Overall, 91 interviews were conducted with
key stakeholders from Ghanas mining sector of which
the majority were community-based organizations.

The sample of mining


companies included in this
report represents about
71 per cent of large-scale
gold mining or approximately
46 per cent of the entire gold
mining industry in Ghana.

Limitations in scope
Although the study aims to be as comprehensive as possible,
there are several limitations in its scope forced by time and
other constraints:
The study focuses on gold mining because gold is by far
the most significant mineral mined in Ghana. Owing to
very limited data availability for artisanal and small-scale
mining, the focus in this study is on large-scale mines.
The sample of seven mines included in this report
represents about 71 per cent of large-scale gold mining
or approximately 46 per cent of the entire gold mining
industry in Ghana.
The projected life cycle data provided by each of the mining
companies is based on a gold price of US$1,300 per ounce.
It is also assumed that international and national policy
conditions remain broadly as they are now, which, like the
gold price, are likely to change.
The life cycle company data is based on planned production
figures from the sample of mining companies planned in
the beginning of 2014. These projections are based on
expenditures that are presently authorized and exclude the
ones that may be authorized or revised in the future.
Social and health/environmental impacts of mining are not
quantified in this report. This omission is intentional
because the quantification of these impacts would involve
a different type of analysis. The report, however, addresses
some of these impacts in a more qualitative way through
the stakeholder surveys that were conducted.

Abbreviations

ACET
African Center for Economic Transformation

ICMM
International Council on Mining and Metals

capex
capital expenditure

MPD
Mining: Partnerships for Development

CSO
civil society organization

NGO
non-governmental organization

ECOWAS
Economic Community of West African States

opex
operational expenditure

FDI
foreign direct investment

SAM
social accounting matrix

GDP
gross domestic product

SME
small and medium-sized enterprise

GSS
Ghana Statistical Service

UNCTAD
United Nations Conference on Trade and Development

GTAP
Global Trade Analysis Project

Ghanas economy
and the role of
mining

Image courtesy of The Ghana Chamber of Mines

Ghanas economy and the role of mining

1
Ghanas economy and the role of mining
This section provides a brief
background of Ghanas recent
economic, social and governance
performance. It also provides the
context of the mining industry
in Ghana.

1.1
National profile
Governance
Ghana was the first sub-Saharan African colony to achieve
independence from the British in 1957. Administratively,
Ghana is a centralized country. There are 10 regions, but no
strong regional governments, and at the local level there
are districts and municipalities. In terms of traditional
governance system, almost all areas of the country are
under the leadership of traditional Stools or skins,
presided over by traditional chiefs.
Growth
After a severe collapse in the 1970s, the Ghanaian economy
began a recovery in the 1980s that continued through to
the 2000s, and slowly regained some of its lost potential.
Buoyed by high commodity prices for nearly a decade and
the advent of oil production in 2010, the economy grew, on
the back of related investments in mining and oil, from its
average of 6.5 per cent in the 2000s to 15 per cent in 2011
(non-oil GDP growth in 2011 was about 8 per cent) before
slowing down to about 7 per cent in 2013.This rate was
comparatively higher than the sub-Saharan African average
growth rate of 4.2 per cent (World Bank Group 2015). The
expansion of Ghanas oil industry contributed immensely to
the real GDP growth rate in 2011, that is, almost half of the
total real GDP growth in that year. Even without oil, the
growth rate has averaged about 7 per cent annually between
2008 and 2013 (see Figure 1). There is no doubt that the
resurgence of FDI in mining, sustained by favourable
gold prices, contributed to this growth spurt.
The growth in GDP is also reflected in the changing structure
of the Ghanaian economy. The Ghanaian economy is moving
away from agriculture in terms of GDP (about 22 per cent of
Ghanas total GDP) but still employs more than half of the
Ghanaian workforce. The industry sector, in which mining
resides, contributes about 28 per cent to GDP in 2013, and
by far the largest contributor to GDP is the service sector
(50 per cent of GDP).

Buoyed by high commodity


prices for nearly a decade, and
the advent of oil production in
2010, the economy grew from
its average of 6.5 per cent in
the 2000s to 15 per cent in
2011.
14

Mining
in Ghana
What future
can we expect?
Mining:
Partnerships
for Development

MiningMining:
in Ghana
What future
can we expect?
Partnerships
for Development

14

Figure 1: Real GDP growth with and without the oil sector, 200813
With oil

Without oil

9.3%
9.3%

2008
4.0%
4.0%

2009

8.0%
7.7%

2010

15.0%
2011

9.6%
8.1% 8.8%

2012
6.5%

2013

2%

Sources: ACET and GSS data.

4%

6%

7.1%

8%

10%

12%

14%

16%

Real GPD growth

Ghanas fiscal picture is one


of declining non-oil revenues,
persistent budget deficits
and rising
debt-to-GDP
ratios.

Figure 2: Budget deficit as percentage of GDP, 200513


2005

2009

2011

2013

-2

-4

-2%

-4%

-4%

-6
% of GDP

Fiscal picture
Ghanas fiscal picture is one of declining non-oil revenues,
persistent budget deficits (see Figure 2) and rising
debt-to-GDP ratios (see Figure 3). The main revenue
sources are taxes and non-tax revenue, complemented
by grants from development partners, although these
have been declining since 2005. Government spending,
mainly on recurrent expenditure including wages and
salaries, has consistently exceeded government revenue.
Recurrent expenditure reached as high as 86 per cent of
government spending in 2013. Persistent budget deficits
have been largely financed by domestic and foreign
loans, pushing the debt-to-GDP ratio to nearly 55 per cent
in
2013, and it remains one of the highest in the sub-region
(World Bank Group 2015). Moreover, Ghanas inflation at
13.5 per cent was well above the regional average of
below 10 per cent in 2013.

2007

-8

-8%
-9%
-10%

-10

-10%

-12%

-12

-14
-15%
-16
Sources: ACET with Ministry of Finance and GSS data.

Ghanas economy and the role of mining

Ghanas economy and the role of mining

Figure 3: External and domestic debt as percentage of GDP, 200913


Domestic debt/GDP ratio
2009

20%

17%

2011

20%

20%

2013

27%

37%
40%
28%

10

20

External debt/GDP ratio

30

55%

40

50

60

70

80

90

100

GDP ratio (%)


Sources: ACET with Bank of Ghana data.

External accounts
Ghana has become more dependent on imports and suffers
from persistent trade and current account deficits. Imports
nearly doubled between 2005 and 2010. Though exports more
than tripled during the same period, it was not enough to
close the trade balance deficit. The deficit has increased to
US$3,849 million in 2013. Except for a modest surplus in
2003, the current account has averaged a deficit of about
6 per cent of GDP since reaching a peak of 12 per cent
in 2008.

According to the Global


Hunger Index, Ghana is the
only country in the
subcontinent ranked among
the 10 best performers in
improving their score
between 1990 and 2011.

Employment and human development


Nearly a decade of sustained growth has not been matched
by employment growth. Total employment increased by
3.5 per cent annually on average between 2000 and 2010
(with most of the new jobs occurring in the informal sector)
compared with average GDP growth of 6.5 per cent.
Informal sector employment dominates with only about
15 per cent of the labour force in formal sector jobs.
Youth unemployment doubled from 6.6 per cent in 2006 to
12.9 per cent in 2012. Although extreme poverty has fallen
from 37 per cent in 1992 to 8.4 per cent in 2014, income
inequality persists with the Gini measure of inequality rising
by 27 per cent from 0.55 in 1992 to 0.71 in 2013
On human development indicators, Ghana has performed
well compared to other sub-Saharan African countries.
Ghana ranked 13th out of 52 African countries in the Human
Development Index in 2013, achieving medium human
development status. According to the Global Hunger Index,
Ghana is the only country in the subcontinent ranked among
the 10 best performers in improving their score between
1990 and 2011. Ghanas Global Hunger Index score fell by
58.6 per cent, indicating hunger has declined significantly.
In 2013, the Ibrahim Index of African Governance ranked
Ghana seventh out of 52 African countries.

There is a very long history of mining in Ghana.


In particular, there is evidence of gold mining and a gold
trade with North Africa going back to the Middle Ages.
A number of European powers had interests in Ghana,
culminating in the establishment of the British Gold
Coast colony in the nineteenth century. Today, Ghana
is Africas second largest gold producer after South
Africa. Figure 4 shows Ghanas gold production since
1960 and its significant increase since 1990.
Not surprisingly, Ghanas mining production is largely
driven by gold, contributing more than 95 per cent of the
countrys total mineral revenue as shown in Figure 5.
The other commercially exploited minerals in Ghana
include manganese, bauxite and diamonds. Industrial
minerals such as brown clays, kaolin, silica sand and
mica have been exploited on a smaller scale to supply
local industries. The country is also endowed with many
more under-exploited deposits of iron ore, limestone,
columbite-tantalite, feldspar, quartz and salt, and there
are also minor deposits of ilmenite, magnetite and rutile.
There is also huge potential in solar salt production
(Minerals Commission 2010).

Figure 4: Gold production in Ghana, 19602010


3.5

3.0

Ounces of gold produced (million)

1.2
The mining sector

2.5

2.0
1.5

1.0

0.5

0
1960

1970

1980

1990

2000

2010

Source: Minerals Commission.

Figure 5: Total mineral revenues and gold revenues, 200513


Gold revenue

5,000

4,000
US$ million

Ghanas mining production


is largely driven by gold,
contributing more than
95 per cent of the countrys
total mineral revenue.

Total revenue

6,000

3,000

2,000

1,000

0
2005

2007
2009

2011

Sources: Ghana Revenue Authority and Minerals Commission.

2013

Ownership
The ownership structure of the industry can be
categorized in two main phases. In the post-independence
phase (until
1983), there was almost 100 per cent state ownership, with
only one exception, the former Ashanti Goldfields Corporation
(Minerals Commission 2010). Furthermore, in 1972, the state
acquired a majority (55 per cent) interest in the non-stateowned mining operations (Minerals Commission 2010).
The second phase is the post-1983 Economic Recovery
Program phase with a push towards attracting foreign
investment, privatization and state divestiture. The sector is
now largely foreign owned; the Government of Ghana has
minority (10 per cent) free carried interest share in most of
the main active large-scale mining operations as shown in
Table 1, with Newmont and AngloGold Ashanti as
exceptions.1

Local equity participation in the sector is also very minimal,


especially in the large-scale mining sector: domestic
players make up 24 per cent of the sector while foreign
companies make up the remaining majority (KPMG
International 2014).
The small-scale mining industry is reserved for Ghanaians.
Although stakeholders describe an influx of foreigners with
heavily mechanized illegal mining in the sector, there is
hardly any official data to enumerate the extent of foreign
influence in the sector. However, in 2014, the Government of
Ghana deported about 5,000 foreigners reportedly involved
illegally in small-scale mining (Ministry of Finance and
Economic Planning 2014).

Table 1: Major mining operating companies in Ghana


Mining company name

Government
share

Type of
operation

Location in Ghana

Country of
*
origin

Annual output
(2013)**

Adamus Resources

10%

Gold

Teleku-Bokazo and
Nkroful (Western Region)

Australia

105,215 ounces

AngloGold Ashanti

1.7%

Gold

Obuasi (Ashanti Region)


and Iduapriem
(Western Region)

South Africa

239,052 ounces

Chirano Gold Mines

10%

Gold

Chirano (Western Region)

Canada

274,683 ounces

Ghana Bauxite Company

20%

Bauxite

Awaso (Western Region)

China

826,994 tonnes

Ghana Manganese Company

10%

Manganese

Nsuta (Western Region)

Australia

1,997,911 tonnes

Gold Fields Ghana

10%

Gold

Tarkwa and Damang


(Western Region)

South Africa

785,421 ounces

Golden Star Resources

10%

Gold

Prestea and Wassa


(Western Region)

Canada

330,807 ounces

0%

Gold

Kenyasi (Brong Ahafo)


and New Abirem
(Eastern Region)

USA

699,366 ounces

Perseus Mining (Ghana)

10%

Gold

Ayanfuri (Central Region)

Australia

198,608 ounces

Prestea Sankofa Gold

10%

Gold

Prestea (Western Region)

Ghana

22,853 ounces

Newmont Ghana

Sources: Ministry of Finance Ghana Extractive Industries Transparency Initiative (GHEITI) 2014 and company websites.
Notes: * Country of origin is ascribed to the country of the largest shareholder. ** Ghana Chamber of Mines 2013.

1 The Government of Ghana has a 10 per cent free carried interest in


Newmont after the initial cost of investment is recouped. With respect to
AngloGold Ashanti, the state holds shares in the global company rather
than the Ghana mines.

BURKINA FASO

Wulugu

UPPER WEST

National capital

Bolgatanga

UPPER
EAST

Lawra

International boundary
Province boundary

Bawku
Zebila

Navrongo

Tumu

Hamale

GHANA
Regional capital
Town, village

Nakpanduri
Gambaga
Wawjawga

Main road
Secondary road
Railroad

Wa

Airport

Gushiago

MINING OPERATIONS

Sawla
Gbenshe
Bole

1 Adamus Resouces
2 Chirano Gold Mines

NORTHERN

Daboya

Yendi

Tamale

4 Gold Fields Tarkwa

Zabzugu

Japei

Damango

3 Gold Fields Damang


5 Golden Star Wassa
6 Newmont Ahafo

Bimbila

7 Newmont Akyem

Salaga

CTE DIVOIRE

0
0

Yeji
Bamboi

25

50
25

75
50

100 Kilometers
75 Miles

VOLTA

Kintampo

Dumbai

Sampa

BRONG-AHAFO

Kete Krachi

Kwadjokrom
Atebubu

Wenchi
Techiman

TOGO

Kadjebi
Jasikan
Ejura

Sunyani

Kumasi
Adriemba
Awaso

Konongo

Anyirawasi

Obuasi

Dzodze

Begoro

Akosombo
Dam

Kade
Oda

Dunkwa

Shai
Hills

3
4

CENTRAL

Elmina

Saltpond

Cape Coast

GREA

Ada Anloga

ACCRA

Tema
Teshi

Swedru

Twifu Praso

Sogakofe

TER

Nsawam
Foso

Newtown Half Assini

Aflao

Koforidua

Enchi

Accra
Winneba

Esiama

Axim

BENIN

Ho

L. Bosumtwi

Bekwai

WESTERN

Kpandu

EASTERN

Agogo

Wiawso

Volta

Mampong

ASHANTI

Hohoe

Lake

Bechem

Sekondi-Takoradi

Gulf of Guinea

Keta Lagoon

Keta

Source: Based on map 4186, United Nations, www.un.org.

Mining sector policy and legal framework


Assisted by the World Bank and IMF, in 1983 the mining
sector in Ghana started the inception stages of the
Economic Recovery Program guided by the Structural
Adjustment Program. The policy orientation was to
strengthen the value of the domestic currency through the
promotion of exports and to increase FDI inflow. The mining
sector was identified as a sector that could champion this
agenda. To this end, a comprehensive mining law, which was
the first in the history of Ghana (Minerals and Mining Law,
1986, PNDCL 153), was designed to aid large-scale
investment in the sector. The law and the subsequent
efforts to regulate the small-scale gold mining sector in
1989 led to significant investment activity, leading to an
increase in gold production, as well as in bauxite and
manganese. Subsequent legislation and reforms focused
mainly on establishing key state mineral institutions to
govern the sector (see Table 2).

Competition for investment across the African continent has


informed amendments in the mining laws and regulation in
Ghana. In 2006, the Minerals and Mining Law, 1986, PNDCL
153 was replaced with the Minerals and Mining Act (Act 703).
Act 703 was meant to be a game changer in bringing in
foreign investment; it offered favourable terms to investors
by reducing government carried interest in new mining firms
to 10 per cent and introduced stability clauses. Act 703 was
amended in 2010 with the Minerals and Mining (Amendment)
Act (Act 794).
The strong desire to deepen local involvement in mining
culminated in the latest piece of legislation in 2012, Minerals
and Mining (General) Regulations (LI 2173), which requires
mineral rights holders to procure goods and services of
Ghanaian origin to the maximum extent possible. A cursory
look at all policy developments in the sector over the last
decade demonstrates that government is increasingly
focusing on regulating and promoting the small-scale mining
sector and strengthening the collection, transparency and
management of mineral revenues. Appendix D provides a
more detailed overview of the key policy developments in
Ghana since 2004.

Table 2: Legislation and reforms governing the mining sector


Reforms

Date

Minerals and Mining Law, PNDCL 153

1986

Establishment of the Minerals Commission, PNDCL 154

1986

Minerals (Royalties) Regulations, LI 1349

1987

Small-scale Gold Mining Law, PNDCL 218

1989

Precious Minerals Marketing Corporation Law, PNDCL 219

1989

Establishment of Precious Minerals Marketing Corporation

1989

Establishment of Environmental Protection Agency

1994

Drawing up of mining environmental guidelines

1994

Minerals and Mining (Amendment) Act (Act 475)

1994

Review of mining environmental guidelines

1999

Divestiture of state-owned mines from 1992 to 1999

1992 to 1999

Minerals and Mining Act (Act 703)

2006

Minerals and Mining (Amendment) Act (Act 794)

2010

Minerals and Mining (General) Regulations, LI 2173

2012

Minerals and Mining (Support Services) Regulations, LI 2174

2012

Minerals and Mining (Compensation and Resettlement) Regulations, LI 2175

2012

Minerals and Mining (Licensing) Regulations, LI 2176

2012

The Minerals and Mining (Health, safety and Technical) Regulations LI 2182

2012

Minerals and Mining (Explosives) Regulations LI 2177

2012

Sources: Akabzaa and Darimani 2001 and Ibrahim 2013.

The Ministry of Lands and Natural Resources, through the


Geological Survey Department and the Minerals
Commission, oversees all aspects of Ghanas mineral
sector. The Geological Survey Department is responsible for
providing reliable and up-to-date geological information
and serves as the repository for the countrys geoscientific
data. The Minerals Commission is responsible for regulating
and managing the use of Ghanas mineral resources and for
co-ordinating government policy related to them. Through its
Inspectorate Division, the Minerals Commission institutes
and enforces environmental, health and safety standards in
the countrys mines and ensures that mining companies
and all mining-related activities comply with Ghanas mining
and mineral law.
Mining fiscal regime
Ghanas mining fiscal regime has been fairly stable since
the mid-1980s. Major amendments were made in 2006 with
the promulgation of the Minerals and Mining Act (Act 703).
Ghana generally uses the minimum of upfront rent capture
and unit- or value-based tax types, relying more heavily
on mandatory revenue- and profit-based measures.

Figure 6: The national contributions of mining in 2013

The highlight of the fiscal provisions in the 2010 amendment


is the change in royalty rate from a variable rate of 3 to 6 per
cent to a fixed rate of 5 per cent across the sector. Stability
and project development agreements with some companies
meant the change did not apply to all mining companies.
The amendment also saw the change in the capital allowance
regime to a straight-line depreciation of 20 per cent per
annum from the previous accelerated depreciation of 80 per
cent first year and 50 per cent declining in subsequent years.
Furthermore, the amendment changed corporate tax from
25 per cent to 35 per cent. Loss carry-forward provisions of
five years apply. Mining companies are exempt from paying
import and export duties on some items outlined in the
Mining List and are mandated to a withholding tax of
10 per cent2 and a capital gains tax of 15 per cent.
The mining sector today
The mining sector today continues to be an important
sector for the Ghanaian economy. Figure 6 shows that
Ghana broadly conforms to the inverted pyramid pattern
of macroeconomic contributions seen in other low- and
middle-income mineral-driven countries.

Typical share in
low- and middleincome mineraldriven countries

Ghana

60%90%

>50%

30%60%

37%

3%20%

19%

3%10%

1.7%

1%

1.1%

FOREIGN DIRECT INVESTMENT

EXPORTS

GOVERNMENT REVENUE

GROSS DOMESTIC
PRODUCT
DIRECT
EMPLOYMENT

Sources: Ghana figures are based on ACET with Bank of Ghana, Ghana Revenue Authority, GSS, Minerals Commission and Ministry of Finance data,
and the typical share is retrieved from previous MPD Toolkit applications.
2 There are a range of withholding taxes in Ghana. For a complete overview
of withholding tax rates see p30 of PwCs report: A quick guide to taxation
in Ghana 2014 Tax Facts and Figures.

Ghanas economy and the role of mining

Ghanas economy and the role of mining

Mining-related FDI, as Figure 6 shows, is over 50 per


cent of Ghanas total FDI inflow, and mining exports grew
by more than 400 per cent since 2005 (see Figure 7).
The sector has therefore been important for Ghana as
it provided the necessary foreign exchange reserves
and supported the countrys balance of payments
position. Mining exports contribution to overall exports
(see Figure 8) has averaged around 41 per cent of
overall exports since 2005 and was 37 per cent in 2013.

Mining-related FDI is over


50 per cent of Ghanas total
FDI inflow, and mining
exports grew by more than
400 per cent since 2005.

Figure 7: Mining exports, 200513


2005

1,023
1,372

2006

1,815

2007

2,264

2008

2,619

2009

3,888

2010

5,063

2011
2012

5,771

2013

5,141

1,000

2,000

3,000

4,000

5,000

6,000

7,000

US$ million

Sources: ACET with Bank of Ghana data.

Figure 8: Mining exports contribution to overall exports, 200513


Total mining exports (US$ million)

Total non-mining exports (US$ million)

2005
2006

3,727
4,195

2007

5,270

2008

5,880

2009
2010

7,960

2011

12,773

2012

13,552

2013

13,752
0

2,000

Sources: ACET with Bank of Ghana data.

4,000

6,000

8,000
US$ million

10,000

12,000

14,000

16,000

Figure 9: Tax payments from the mining sector as percentage of total direct tax payments in Ghana, 200513
2005

11%

2006

10%
14%

2007

15%

2008

18%

2009

21%

2010

28%

2011
21%

2012
19%

2013

5%

10%

Sources: Ghana Revenue Authority and Minerals Commission.

15%

20%

25%

30%

35%

% of direct tax payments

Figure 9 shows that about 19 per cent of government tax


revenue comes from the mining sector. Except for the
recent advent of oil, the mining sector makes the largest
contribution to government revenue. Royalties alone have
ranged between 4 and 6 per cent of total direct tax
revenue
and corporate income tax between 5 and 16 per cent for the
period 2005 to 2013. Total royalties, corporate income tax
and other tax payments made by the mining sector range
from 10 per cent to 28 per cent, averaging about 16 per
cent for the past decade.
Although formal large-scale mining is capital intensive,
large-scale mining and artisanal mining together provide
considerable direct and indirect employment. The Ghana
Living Standards Survey conducted between 2005 and 2006
indicated that minings share of total employment in
Ghana was about 0.7 per cent (Ghana Statistical Service
2008b). According to the 2010 census, the mining and
quarrying sectors all together employ 1.1 per cent of all
jobs; this figure likely underestimates the overall
employment effect
of mining (Ghana Statistical Service 2013). The Ghana Living
Standards Survey completed in 2014 records an increase of
employment in mining and quarrying to 1.6 per cent (Ghana
Statistical Service 2014a). Employment in the sector has
more recently declined because of the limited operations
phase of the Obuasi mine the largest gold mine in the
country in terms of direct employment.

As well as paying taxes and providing employment


opportunities, mining companies also make direct
contributions to the communities that host their operations.
These social investments are diverse and support a range
of priorities such as education, health, alternative
livelihood assistance and other infrastructural needs.
These expenditures are intended to complement the
governments efforts in developing the mining communities.
According to the Resource Governance Index, Ghanas
governance of the resource sector ranked 15th out of 58 in
the world in 2013. The index measures country governance
performance in terms of government accountability,
transparency and rule of law. Areas for attention are
Ghanas reporting practices, as the government does not
publish comprehensive information on key aspects of the
mining industry. Ghana was the highest ranked African
country followed by Zambia and then South Africa as
shown in Figure 10.

Except for the recent advent


of oil, the mining sector makes
the largest contribution to
government revenue.

Figure 10: Resource Governance Index 2013


Norway
United States
United Kingdom
Australia
Brazil
Mexico
Canada
Chile
Colombia
Trinidad and Tobago
Peru
India
Tomor-Leste
Indonesia
Ghana
Liberia
Zambia
Ecuador
Kazakhstan
Venezuela
South Africa
Russia
Philippines
Bolivia
Morocco
Mongolia
Tanzania
Azerbaijan
Iraq
Botswana
Bahrain
Gabon
Guinea
Malaysia
Sierra Leone
China
Yemen
Egypt
Papua New Guinea
Nigeria
Angola
Kuwait
Vietnam
Congo (DRC)
Algeria
Mozambique
Cameroon
Saudi Arabia
Afghanistan
South Sudan
Zimbabwe
Cambodia
Iran
Qatar
Libya
Equatorial Guinea
Turkmenistan
Myanmar

10

Source: Natural Resource Governance Institute.

20

30

40

50

60

70

80

90

100

Image courtesy of The Ghana Chamber of Mines

Macroeconomic life
cycle contributions
of mining

Macroeconomic life cycle contributions of mining

2
Macroeconomic life cycle contributions of mining
This section presents for the first
time a picture of the macroeconomic
contributions from Ghanas mining
sector, using both actual and projected
data provided by a number of Ghanas
largest mining companies (see Annex
A for more details on the data and
assumptions used). The seven mines
together represent over 71 per cent of
the large-scale gold mining sector or
approximately 46 per cent of the entire
gold mining industry in Ghana.

Figure 11 shows all those mining companies that are


included in our analysis (green) and those companies that are
excluded from the analysis (yellow and red).
It should be noted that the life cycle company data is based
on historic data beginning in 2010 and planned production
figures from 20142022 from a sample of seven mining
operations. These projections are based on expenditures that
are presently authorized and exclude the ones that may be
authorized or revised in the future. At the start of this study
the majority of the sample of mining companies based their
projections on a US$1,300 per ounce gold price, and
consequently all other mining companies who did not work
with that price adjusted their life cycle financials accordingly.
Projections show the minimum expected contributions of the
sample of mining companies under a given gold price,
assuming that international and national policy conditions
remain broadly as they are now. Therefore the results
presented in this report are not forecasts but rather an
illustration of what the future may look like.

Figure 11: Percentage breakdown of the gold mining sector based on gold volumes produced in 2013
Data partially available

Data available

Data not available


Anglogold Ashanti Obuasi 5%
Anglogold Ashanti Iduapriem 5%
Golden Star Bogosa/Prestea 3%
Golden Star Wassa 4%

Gold Fields Tarkwa 14%

Gold Fields Damang 3%

Newmont Ahafo 13%

Newmont Akyem 3%
Chirano Gold Mines 6%
Adamus Resources 2%
Perseus Mining (Ghana) 5%
Other mining companies 1%
Total small-scale 35%
Source: Minerals Commission.

26

Mining
in Ghana
What future
can we expect?
Mining:
Partnerships
for Development

MiningMining:
in Ghana
What future
can we expect?
Partnerships
for Development

26

2.1
Life cycle projections of the mining sector
Figure 12 provides an overview of the historical and
projected mine production volumes and shows increasing
production volumes from 1,910 thousand ounces in 2010 to a
projected amount of 2,138 thousand ounces in 2014. From
2014, projected production on average decreases by 4.6 per
cent per year to 1,510 thousand ounces in 2022. This decline
reflects genuine reductions in production but is also because
a low gold price constrains mine extension plans. Genuine
reductions happen because mines are in different phases of
the life cycle (see Annex E). For example, one mine is
expected to close in 2019 while others are (almost) in full
production. The data taken from the sample of mining
companies does not include any new projects that may come
on stream in
the future. Nor does it include exploration companies,
and therefore the decline in projected gold production is
not necessarily a trend for the entire gold mining
industry.

The sample of mining


companies does not include
any new projects that may
come on stream in the future.
Nor does it include exploration
companies, and therefore the
decline in projected gold
production is not necessarily
a trend for the entire
gold mining industry.

Figure 12: Historical and projected mine production volumes for the seven mines in the sample, 201012
Historical data
2010
2011

1,910

2,036

2012
2013
Projected data
2014
2015
2016

1,907

2017

1,908

2018

1,922

2019

1,902

2020

Average
4.6%
production
decrease
per year

1,836
1,533

2021

1,510

2022

Average

1,896

500

1,000

1,500
000 ounces

Source: Steward Redqueen and mining company data from seven mines.

2,000

2,500

Macroeconomic life cycle contributions of mining Macroeconomic life cycle contributions of mining

The high gold price in the


period 201013 led to
significant investments
in the sector.

Figure 13 shows that declining volumes and lower gold


prices (compared to the all-time high in 2011) bring about
lower revenues and expenditures from 2014 onwards.
The high gold price in the period 201013 led to significant
investments in the sector. This situation reverses from
2014 onwards, in part reflecting lower gold prices.

Figure 13: Historical and projected sales revenues and expenditures for the seven mines in the sample, 201022
Sales revenues
Historical data

Expenditures

2,258
2,162

2010
2011

3,342

2,725

2012

3,064

2013

3,481
3,447

Projected data
2,095

2014

2,317

2,255

2015

3,693

2,446

2,221
2,104
2,194
2,054
2,222
2,078
2,185
2,065

2016
2017
2018
2019

2,220

1,909

2020

2,062

2021

1,716

2022

1,728

2,075

2,262

Average

500

1,000

1,500

2,000
US$ million

Source: Steward Redqueen and mining company data from seven mines.

2,517

2,500

3,000

3,500

4,000

Mining-related expenditures were on the increase in the


years up to 2013 followed by a projected decline. In the short
term this decrease does not boost mining company profits
because the declining gold price also causes revenues to
decrease. However, from 2020 onwards we see a significant
increase in mining company profits (see Figure 14).

We attribute this primarily to the stage in the life cycle


(see Annex E) whereby non-labour capex and opex
investment gradually reduce as mines come closer to their
end of life, and also to efficiency improvements that will
need to take place (as a result of the lower gold price).

Figure 14: Total historical and projected revenue breakdown for the seven mines in the sample, 201022
Non-labour capex

Social investments

Non-labour opex

Wages and labour cost

Payments to the government


Mining company profits

Historical data
2010

539

2011

436

2012

276

96 2,258

226

1,364

470

2013

193

1,138

641

1,602

617

256

1,139

3,342

675

1,439

417
311

539

3,481
245

3,693

Projected data
2014

326

2015

431

2016

332

2017

328

2018

338

231

1,142

229

1,236
1,209
1,186

364
310

2021

1,181
995

181

176 995
243
905

2022

Average

418
0

1,201
1,500

2,317
191

273

117

218

294

220

331

145

210

305

121

140

312

2,194
2,222
2,185
2,220

2,062

347

2,075

408
2,000
US$ million

Source: Steward Redqueen and mining company data from seven mines.

2,446

2,221

346

218
1,000

351

418

171 412
161 415

500

222

228

1,236

2019
2020

367

255

2,517
2,500

3,000

3,500

4,000

Figure 15 presents the cumulative profits of the sample of


mining companies, government income and supplier
expenditures over the period 201022. On average, mining
company profits (profits accruing to mining companies after
all statutory obligations are satisfied), are approximately
10 per cent of total revenues, while the Government of Ghana
receives about 16 per cent of total revenues. This shows that
the government is the largest individual beneficiary of the
presence of mining; for every US$1 of mining company
profits US$1.6 accrues to the Government of Ghana.
Considering that most companies in the sample of mining
companies invested most before 2010, average profits for
the sample of mining companies are likely to be even less
over the full life cycle than the 10 per cent stated in Figure
15.

If we look specifically at the expenditures made in Ghana,


Figure 16 shows that expenditures in Ghana were about half
of total revenues seen in Figure 14. Imports and foreign
profits (profits accruing to the international shareholders of
the mining companies that operate in Ghana) are excluded
from the analysis as they do not affect the Ghanaian
economy.3 Apart from profits to foreign shareholders, the
reality is that for many goods and services there are either
no Ghanaian alternatives available or none that meet the
quality and timeliness standards of the mining sector. In
the remainder of this report, in-Ghana supplier
expenditures, local procurement and local sourcing will be
used interchangeably.

Figure 15: Historical and projected cumulative expenditures, government income and mining profits, 201022
Total expenditures (excl government income)

Total government income

Total profit mining companies

Historical data
2010
2011
2012
2013
Projected data
2014
2015
2016
2017
2018
2019
2020
2021
2022

74%

5,000

10,000

16%

15,000

20,000

US$ million
Source: Steward Redqueen and mining company data from seven mines.

3 In cases where foreign profits are reinvested in Ghana they will reappear
as national payments or imports in the following years.

25,000

10%

30,000

35,000

Macroeconomic life cycle contributions of mining Macroeconomic life cycle contributions of mining

Ghanaian non-labour capex and opex, and social investments


comprise half of all expenditures made in Ghana and are
considered local procurement expenditures. On average
this is US$628 million, respectively US$155 million, US$456
million and US$17 million, which is about 25 per cent of
total expenditures (US$2,517 million; see Figure 14). Most
local procurement relates to contract services such as
construction and transportation, utilities and (maintenance)
materials.

On average the sample of mining companies paid about


US$177 million in salaries. This includes all salaries paid
to national employees and allowances for national and
expatriate employees (spending on housing, transportation,
food, etc in Ghana).
Social investments are an even smaller portion of the
payments made in Ghana (on average US$17 million).
The social investments shown in Figure 16 are only those
that directly impact the Ghanaian economy; construction of
schools, boreholes and clinics are included, but scholarships
to Western schools and other expenses abroad are not as
they do not affect the Ghanaian economy (in terms of
spending).

Compared to supplier and government payments, salaries


are a relatively small component of spending in Ghana
(reflecting the capital-intensive nature of the mining
industry).

Figure 16: Historical and projected expenditures in Ghana, 201022

Historical data
2010

199

2011

161

499

2012

174

591

2013

421

Non-labour capex

Social investments

Non-labour opex

Wages and labour cost

419

139

276
171

Payments to the government

1,050

1,530

641
200

504

675

1,700

257

1,741

539

Projected data
2014

121

2015

433

160

2016
2017
2018

479

125
121

460
466

135

2020

115

2021

65

2022

90

Average

155

469

123

2019

184
180
182

467
396

367

1,170

273
331
294

180

305

1,065
1,104
1,066
1,091

418

1,089

148

412

1,011

141

415

1,017

456

177

400

1,134

351

184
179

155

383

200

367

600

408

800

1,213

1,000
US$ million

Source: Steward Redqueen and mining company data from seven mines.

1,200

1,400

1,600

1,800

2,000

2.2
Minings impact on value added
In order to show the current and potential impact of mining
in Ghana, the report shows direct and indirect value added
in Ghana between 2010 and 2022. Value added is defined
as the sum of salaries, taxes and profits that accrue to
Ghanaian residents or entities and is comparable to
Ghanas GDP. From the life cycle data provided by the
sample of mining companies, we can determine the direct
value added that the sample contributes to Ghana. However,
in order to determine the indirect value added in Ghana, we
need to understand how much is locally procured and in
which economic sectors those payments end up.
Figure 17 presents a visual impression of how value added
(grey arrows and dots) is created as the spending of the
sample of mining companies (blue arrows and dots) and the
intermediary demand between sectors (red arrows) moves
through the economy. The size of the blue dot indicates
total payments made by the sample of mining companies.

The size of the red dots shows the amount of value added
generated by a sector. The size of he grey dots shows the
beneficiaries of value added. The line thickness indicates the
size of a flow.
The single largest flow is the tax and non-tax contribution of
mining to government income. The construction sector
receives most of the supplier expenditures, but there are also
considerable expenditures on local trade, manufacturing and
utilities. The indirect value added from intermediary demand
(red arrows) is shown as grey arrows flowing from each
economic sector to the value-added components.
Figure 17 also shows how the sample of mining companies is
integrated into Ghanas economy. While it may never be
possible to source all specialized products and services
from within Ghana, there are opportunities to get a greater
degree of integration via upstream linkages, which can drive
greater economic diversification (if these sectors can supply
other sectors, rather than be reliant only on the mining
sector
for business).

Figure 17: Pathways through which the sample of mining companies expenditures creates value addition
Supplier payments

Agriculture

Intermediary demand
Value added

Manufacturing
Utilities
Extractives

Mining companies

Construction

Trade

Transportation and communication

Services
Source: Steward Redqueen and mining company data from seven mines.
Note: For reasons of interpretation, intra-sector flows and flows smaller than US$1 million are excluded.

Household income

Company profits and savings

Government income

Figure 18 breaks down the total value added per round of


impact (for more information on rounds of impact see Annex
A). In 2013, a total of US$1,556 million value added was
supported, which is approximately 3.2 per cent of Ghanas
GDP of which US$796 million was supported by the sample
of mining companies themselves, US$507 million by direct
suppliers and US$252 million by suppliers of the direct
suppliers. Total value added decreases to US$940 million or
1.3 per cent of Ghanas GDP in 2022,4 which is in line with
the decline in Ghana expenditures as is shown in Figure
16.

The formal and capital-intensive nature of the mining industry


is the reason that indirect value added is much less than the
direct value added. Having more capital available in a sector
that is well regulated results in higher levels of productivity
and thus more value added per job. Besides that, some of the
local procurement (the sum of Ghanian non-labour capex and
opex, and social investment; see Figure 16), which drives the
indirect effects, is also lost due to additional imports by direct
and indirect suppliers. Based on the input-output methodology
(see Annex A), we estimate that about 20 per cent of
procurement expenditures leave the country and the rest is
translated into value added. This means that for every US$1
spent on local procurement about US$0.80 is value added.

Figure 18: Historical and projected value added per round, 201022
Mining companies

Direct suppliers

Suppliers suppliers

Historical data
2010
2011
2012
2013

425

324

187

927
357

812

226

875

408

261

796

507

252

3.2% of GDP

Projected data
2014
2015
2016
2017

1,395

551

270

531
454

210

297
275

2018

474
515

265
263

2019

485

274

1,031
1,056

228
228
224
224
227

957
963
1,002
986

1,544
1,556

2020
2021
2022

Average

573

233

560

192

556

203
1.3%

584

194

400

600

936

183

940

180

298

200

1,000

217

800

1,099

1,000

US$ million
Source: Steward Redqueen and mining company data from seven mines.

4 Ghanas GDP has been estimated by multiplying Ghanas GDP in 2013 by


the average growth rate of GDP from the last 10 years. This results in an
estimated GDP of approximately US$75 billion in 2022.

1,200

1,400

1,600

1,800

Figure 19 provides a breakdown of the historical and


projected value added per category. The Government of
Ghana and Ghanaian households are the biggest recipients
of the value added. As mentioned in Section 2.1, mining
company profits (foreign profits) are excluded from the
analysis as they do not affect the Ghanaian economy.
Figure 19 therefore only shows profits that are retained
in Ghana, in this case profits made by direct suppliers
and suppliers of suppliers.

Although a fluctuating gold


price directly influences
royalty and corporate income
tax payments, the drop in
government income starting in
2014 is primarily due to capital
allowances in mining.

Figure 19: Historical and projected value added per category, 201022
Household income
Historical data
2010

494

2011

571

2012

660

2013

786

91

Ghanaian company profits

342

Government income

927
1,395

107

716
1,544
123

761
134

636

1,556

Projected data
95

2014

507

2015

534

2016

519

429

104

419

101

338

99

1,056

957

358

2017

507

2018

509

99

394

2019

515

101

370

2020

441

963

86

2021

397

78

461

2022

396

79

465

Average

526
200

400

1,002
986

473

1,000
936

940
128

1,031

600

446

1,099

800

1,000

US$ million
Source: Steward Redqueen and mining company data from seven mines.

1,200

1,400

1,600

1,800

Macroeconomic life cycle contributions of mining Macroeconomic life cycle contributions of mining

Box 2: Capital allowances in mining

In comparison to in-Ghana expenditures (see Figure


16), Figure 20 shows that income for the Government
of Ghana in the form of tax and non-tax payments is
much more volatile. Although a fluctuating gold price
directly influences royalty and corporate income tax
payments, the drop in government income starting in
2014 is primarily due to capital allowances in mining
(see Box 2 for more details on capital allowances).
In 2020, most investments have been recouped, which
results in an increase of corporate income tax
payments of almost US$100 million (from US$88
million in 2019 to US$184 million in 2020). On average,
corporate income tax payments are US$163 million,
but these fluctuate from US$55 million in 2016 to
US$349 million in 2012. In addition to the direct tax and
non-tax payments to the Government of Ghana, this
report also considers the tax payments by suppliers
(on average US$46 million) and the payments by
suppliers of suppliers (on average US$20 million).

It is standard accounting practice to distribute the cost of acquiring


capital (buildings, machinery and equipment) over several years.
The reason for this is that if the capital is used over a long period, its
cost should not be counted against the revenues of only one year.
Tax authorities around the world generally follow the same practice,
requiring the cost of equipment to be deducted against revenues
over several years, corresponding roughly to the life of the piece of
equipment. Such deductions are called capital allowances and are
thus not allowances in the sense of something being given away by
tax authorities to companies. Rather, they reflect the fact that the
acquisition of capital and turnkey projects to construct a mine are
costs that companies can offset against income.
In the case of mining (and often as a general principle), many
jurisdictions allow companies to deduct the cost of equipment over
a shorter period than the equipments productive life. This is called
accelerated depreciation. This practice does not affect the total
amount of tax that is paid over the life of the mine, but it means that
less tax is paid in earlier years and more in later years.

Figure 20: Historical and projected government income broken down by source 201022

Historical data
2010

Free carried interest

Payroll tax

Other taxes

Corporate income tax

84

2011

69

2012

46

2013

27

33

90

59

140

42

86

49

75

55

Royalties

Suppliers suppliers tax

Direct suppliers tax

19 342

46
279

111

349

53

144

254

129

22
60

71

26

716
26

761

636

Projected data
2014

25 65

42

2015 21 57

116

39

121

2016

59

39

55

2017

57

37

75

2018

56

38

102

2019

49

32

120

43

113
108

47
44

110

21

419

21 338
43

119

88

19 429

124

20

358

43

20

44

20

394

370

2020

35

41

27

2021

38

39

26 204

104

33 16 461

2022

39

38

25 206

108

34 16 465

Average

28 65

184

37

100

131

163

38

114

200

300

46

400
US$ million

Source: Steward Redqueen and mining company data from seven mines.

17 473

20

474

500

600

700

800

On average there are five


sectors that together support
most value added: extractives,
utilities, construction, trade
and transportation and
communication.

The previous graphs showed both the direct and indirect


value-added impact. Figure 21 captures only indirect
impacts that stem from local procurement. On average
there are five sectors that together support most value
added: US$84 million in extractives, US$60 million in
utilities, US$112 million in construction, US$97 million in
trade and US$85 million in transportation and
communication.

Figure 21: Historical and projected value added per sector, 201022

Historical data
2010

62

2011

82

2012

93

2013

87

Agriculture

Manufacturing

Extractives

Utilities

30

38

138

31

92

53
36

39

Transportation and communication

Trade

Services

81

141

60

Construction

105
154

96

59

122

110

278

54

511

61

583
81

123

113

699
54

760

Projected data
2014

85

2015

92
92

28

92
91

27 67
26 67

88
84

100
97

88
85

32
503
30
489

92

26 68

85

96

83

28

92

26 69

91

2016
2017
2018
2019
2020

25

2021

79
76

22 59
20 58

2022

75

20 56

Average

84

91

81

78
46

82

62

75

66
64

112

97

200

300

32

84
70

480

88

96

77

30

100
10
0

111
111

67
67

27 60

100

99

62

27
26

29
376

525

487
502

35
427

384

85

400
US$ million

Source: Steward Redqueen and mining company data from seven mines.

40

500

515

600

700

800

2.3
Minings impact on employment

Figure 22 shows that on average about 27,000 jobs are


supported by direct suppliers, 39,000 jobs are supported by
the suppliers of suppliers and 37,000 are supported through
the re-spending of salaries. Note that only for jobs, and not
for value added, we take the re-spending of salaries into
account as an additional round of impact. Whereas the
value-added impact mainly comes directly from the sample
of mining companies (including value added would amount
to a double count; salaries would be counted when earned
and then went spent). Figure 22 shows that most jobs are
actually supported indirectly in the value chain. This results
in an average job multiplier of 15; for every 1 job at the
sample of mining companies there are an additional 15 jobs
supported in the Ghanaian economy.

When it comes to jobs supported in mining, this report


includes jobs at mine sites as well as the indirect jobs with
suppliers and induced jobs caused by the re-spending
of salaries. Over the period 201022, the sample of mining
companies is estimated to support between 83,000 and
148,000 jobs, equivalent to an average of 111,000 jobs
annually. In 2013, about 1.3 per cent of the Ghanaian labour
force was supported by the sample of mining companies, a
figure that is projected to decline to 0.6 per cent of the labour
force in 2022.5 This decline reflects the increase in labour
productivity but also the declining volumes and expenditures.

Figure 22: Historical and projected direct, indirect and induced employment per sector, 201022
Mining companies
Historical data
2010

35

2011

36

2012

38

2013

Direct suppliers

Suppliers suppliers

39

Re-spending of salaries

40

43

120

127

42

50

48

47

143
148

38

2014

24

2015

26

2016

25

24

39

35

106

24

39

36

106

25

40

36

1.3% of labour force

55

Projected data

2017

37

35

40

104
37

40

111

36

108

2018
2019
2020
2021
2022

Average

34

107

21

31

19

32

28

83

19

31
28
0.6% of labour force

83

27

39
20

91

37
40

60

111
80

000 full-time equivalents


Source: Steward Redqueen and mining company data from seven mines.
5 Ghanas labour force has been estimated by multiplying Ghanas labour force
in 2013 by the average growth rate of the population from the last 10 years.
This results in an estimated labour force of 13.8 million people in 2022.

100

120

140

160

Figure 23 excludes the induced effects and only shows the


jobs that are supported through local sourcing. Most of the
jobs, on average 30,000, are in the trade sector. This is no
surprise given the informal nature of the trade sector, with
jobs such as importers of heavy machinery and equipment,
hotel and restaurant staff but also street vendors.
Local procurement is on average US$628 million (see
Figure 16) and on average 66,000 jobs are supported
(excluding the 7,000 jobs that the sample of mining
companies employ themselves); the local procurement
multiplier is 105 jobs per US$1 million of local
procurement.

The mining sectors capital-intensive nature is reflected in


the quality of jobs that are supported. Job quality is defined
as value added per supported job. Value added is the sum
of salaries, company profits and government income and
therefore the quality of job numbers should not be
compared to different levels of salary, although there
obviously is a relation.

Figure 23: Historical and projected direct and indirect employment per sector, 201022
Agriculture

Manufacturing

Extractives

Utilities

Mining companies
Historical data
2010

2011

3 7

10

2012

3 7

12

2013

11

3 8

Trade
Transportation and communication

Construction

27

11
5

13

Services

30

12

37

80
6

85

8
36

8
7

95
5

93

Projected data
2014

2 8

2015

2016

4 3

2017

31

3 71

2018

31

3 70

2019

31

3 71

2020

3 2 6

27

2021

3 2 6

2022

3 2 5

Average

6
7

29

5
32

32

25

2 56

25

2 55

20

30

40

3 74
3 72

3 61

3 68

60

000 full-time equivalents


Source: Steward Redqueen and mining company data from seven mines.

73

80

100

120

Figure 24 shows the quality of jobs supported for an


average year. The sample of mining companies has
the highest quality of jobs, just over US$85,000 per job.
The sectors more closely related with the sample of
mining companies, such as the extractives and
construction sectors, are substantially above the
national average of US$4,400 in 2013.6 The key driver
for this, just as for the sample of mining companies,
is the sectors relative capital intensity. Sectors further
away from the mining companies, especially agriculture
(US$2,200), are more often operating in the informal
economy and therefore the value added per job is
lower.

2.4
Scenario analyses
As indicated, the results in this report are not forecasts but
rather an illustration of what is likely to happen. Changes in
the gold price, fiscal policy or the amount of goods and
services procured locally will influence the sample of mining
companies contribution to the Ghanaian economy. In order to
address this, we examine the following three scenarios:
decline in the projected gold price
increase in the royalty rate
increase in local sourcing by the sample of mining
companies.

Figure 24: Value added per job (direct and indirect) in several sectors (in US$ per job) of the Ghanaian economy on average
Ghanaian average
80,000
Agriculture

70,000

Manufacturing

Number of jobs

60,000

50,000
Trade
40,000

30,000

Services
Utilities

20,000

Transportation and communication


Construction
Extractives

10,000

Mining
companies

0
0

10,000

20,000

30,000

40,000

50,000

60,000

Value added per job (in US$)


Source: Steward Redqueen and mining company data from seven mines.

6 The Ghanaian average is estimated by dividing GDP by labour force:


US$48.7 billion/11.1 million = US$4,401 per person in the labour force.

70,000

80,000

90,000

100,000

Macroeconomic life cycle contributions of mining Macroeconomic life cycle contributions of mining

Figure 25: Scenario decline of gold price over time


Gold price US$1,100

Change in sales revenue

Gold price US$1,300

4,000
3,500

Sales revenue (m US$)

What happens to the contributions when these events occur


is mine-specific. Much depends on the phase of the life
cycle each mine is in. Therefore caution must be taken
when interpreting the results from our scenario analyses.
If for example the gold price decreases, for some mines
volume of earth moved may continue at same speed while
others may slow down. Mill volumes may change as
existing stockpiles (which are likely to be lower grade) are
milled. And when lower grade ore is milled, gold production
will decrease. This again will worsen the decrease of net
profits, eventually shortening the life of mine and
decreasing total life cycle revenues. Unfortunately no
specific company data is available for the different
scenarios. Therefore, we used
a few scenario-specific assumptions to adjust the life cycle
data provided by the sample of mining companies and used
the adjusted data in our input-output analysis.

3,000
2,500
2,000
1,500
1,000
500
0
2010

2012

2014

2016

Change in direct government income

Royalty payments decrease by the same 15 per cent


as the gold price
Other variables (opex, capex, salaries, social investments
and people employed) remain constant in the simulation
period
Company profits decrease, and the free carried
interest of the government and corporate income tax
decrease
by more than 15 per cent.

2020

2022

Gold price US$1,100


Gold price US$1,300

800

Government income (m US$)

Declining gold price


The first scenario considers a drop in the gold price from
US$1,300 per ounce, the gold price used in the life cycle
projections, to US$1,100. Working with company data that
is available, we have applied the following assumptions:

2018

700
600
500
400
300
200
100
0
2010

2012

2014

2016

2018

2020

2022

Gold price US$1,100

Change in value added

Figure 25 shows that sales revenues are about US$300


million less every year, government income and total value
added are about US$120 million less7 while employment
does not change. What is not shown in these results is that
due to a decrease in the gold price, the life of mine is
likely to decrease. Lower margins mean that it becomes
less attractive to mine for the more costly (deeper) ores
and therefore mines will close earlier. In this case, the life
of mine is likely to decrease, but for all mines it is
estimated that this happens after 2022.8

Value added (m US$)

Gold price US$1,300


1,900
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0

2010
2012
Change in employment

2014

2016

2018
2020
2022
Gold price US$1,100
Gold price US$1,300

Employment

(000 full-time employees)

160
140

7 This is straightforward given that government income is the only


value-added component (salaries, Ghanaian company profits and
government income) that changes.
8 Income figures for mining companies might be negative in the next years
(due to depreciation) but cash flows remain positive and therefore any
earlier closure of a mine, which is likely to happen with a lower gold
price, is beyond 2022 and therefore out of the scope of this study.

120
100
80
60
40
20
0
2010

2012

2014

2016

2018

2020

2022

Source: Steward Redqueen and mining company data from seven mines.

Increasing royalty rates


If the government changed the royalty regime from 5 per
cent to 10 per cent, the same scenario applies as with a
decreasing gold price; the profits for the sample of mining
companies decrease and as a result the life of mine is
shortened. Working with the company data that is
available, we have applied the following assumptions:

Figure 26: Scenario royalty rate over time


10% royalty
Change in sales revenue

5% royalty

Sales revenue (m US$)

4,000

Royalty payments increase from 5 per cent to 10 per


cent
Other variables (opex, capex, salaries, social investments
and people employed) remain constant in the simulation
period

3,500
3,000
2,500
2,000
1,500
1,000
500
0

Company profits and thus free carried interest and


corporate income tax decrease due to higher royalty
payments, while expenditures remain constant.
9

2010

2012

2014

2016

2018

Change in direct government income


Government income (m US$)

Figure 26 shows that sales revenue does not change,


government income increases by about US$70 million, total
value added increases approximately US$70 million10 and
employment does not change. Higher royalties come at the
expense of the participating interest of the government in
the mines and at the expense of corporate income tax.
That, in combination with a greater chance that the life of
mine will shorten,11 means that the Government of Ghana
would receive small short-term gains at the expense of
larger long-term gains.

2020

2022

10% royalty
5% royalty

800
700
600
500
400
300
200
100
0

2010
2012
Change in value added

2014

2016

2018

2020
2022
10% royalty

9 The freed carried interest rate, which is a percentage, is fixed by law.


Although the percentage is fixed it does not mean infer that the actual
value (payments) are a fixed amount.
10 This is straightforward given that government income is the only valueadded component (salaries, Ghanaian company profits and government
income) that changes.
11 Income figures for mining companies might be negative in the next years
(due to depreciation) but cash flows remain positive and therefore any
earlier closure of a mine, which is likely to happen with a higher
royalty rate, is beyond 2022 and therefore out of the scope of this
study.

Employment (000 full-time employees)

We used scenario-specific
assumptions to adjust the
life cycle data provided by
the sample of mining
companies.

Value added (m US$)

5% royalty
1,900
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2010

2012

2014

2016

2018

Change in employment

2020

2022

10% royalty
5% royalty

160
140
120
100
80
60
40
20
0
2010

2012

2014

2016

2018

2020

2022

Source: Steward Redqueen and mining company data from seven mines.

Macroeconomic life cycle contributions of mining

Increasing local sourcing


On average US$628 million, equivalent to 25 per cent of
total expenditure, is spent or projected to be spent in
Ghana. More local sourcing will result in more value
added and employment in-country. This results in more
demand for other products and services, and consequently
more value added and employment is created in the
country. Increasing demand also allows local industries to
develop and the country to diversify its economy. A
diversified economy is desirable because it makes Ghana
less vulnerable to external shocks such as a sudden drop
in
the price for oil, cocoa or gold.

Figure 27: Scenario local sourcing over time

Sales revenue (m US$)

2,500
2,000
1,500
1,000
500

2012

2014

2016

maintenance supplies
overhead.

2022

700
600
500
400
300
200
100
0
2010

Local sourcing is price competitive and thus cost


neutral13

2020

Projected local sourcing

800

Government income (m US$)

materials

2018

Increased local sourcing

Change in direct government income

contract services

2012

2014

2016

2018

2020

2022

Increased local sourcing

Change in value added

Projected local sourcing

Employment (000 full-time employees)

Value added (m US$)

Other variables remain constant (government income,


company profits, salaries, social investments and people
employed) in the simulation period.

14 This is straightforward given that government income is the only valueadded component (salaries, Ghanaian company profits and government
income) that changes.

3,000

2010

capital equipment

13 In the short run this may not be the case as it is more difficult to produce
products for the same price as imported products, but in the long run
Ghanaian companies can become competitive especially considering the
lower transportation costs.

3,500

Local sourcing expenditures for the following


categories increase by 25 per cent12

12 For these expenditure items we assume that first the low hanging fruit,
that is products and services of less technical requirements, are
procured. Other expenditure items such as transportation and
communication are already almost fully locally sourced and therefore
have not been included in the assumptions/analysis.

Projected local sourcing

4,000

The following scenario looks at what happens if the sample


of mining companies are able to increase the amount of
procurement spend that is local. Of course not all
products
and services can be procured locally, even highly developed
countries such as Germany and Japan need to import some
products and services, but working with the company data
that is available we have applied the following assumptions:

Figure 27 shows that while sales revenue and government


income paid by the sample of mining companies do not
change, more local procurement means more local
production resulting in more taxes, salaries and profits
being retained in Ghana. The total value added would
increase by about US$50 million14 and employment by about
9,000 jobs. If it were possible to increase the percentage of
procurement spend that is local see Section 4 on how
this might be achieved Ghana would benefit significantly.

Increased local sourcing

Change in sales revenue

1,900
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2010

2012

2014

2016

Change in employment

2018

2020

2022

Increased local sourcing


Projected local sourcing

160
140
120
100
80
60
40
20
0
2010

2012

2014

2016

2018

2020

2022

Source: Steward Redqueen and mining company data from seven mines.

Image courtesy of The Ghana Chamber of Mines

Lo
cal
vi
e
w

Local views

3
Local views
In addition to the desk research and
forward-looking analysis based on
company data, we undertook
consultations with key stakeholders to
better understand the impact that the
mining sector has had on the economy
and especially on mining communities
and their social and economic well-being.
We also asked stakeholders to identify
the key challenges that are facing the
sector and what measures and
interventions they think may be useful
in order to enhance the sectors impact.

3.1
The different stakeholder groups
The sample of participants surveyed was selected to reflect
a broad representation of key stakeholder groups in the
mining sector. The majority of the stakeholders interviewed
(55 per cent) were community-based organizations. The
remaining
45 per cent were from national institutions, with the majority
of them based in the capital city, Accra. Overall, 91 interviews
were conducted with key stakeholders from Ghanas mining
sector (see Annex B) largely from seven broad stakeholder
groups shown in Figure 28.
The community stakeholders were drawn from the
surrounding areas of two mining operations in the
country
Chirano mine and the Damang gold mine. These mining
operations are in different stages in the life cycle (see
Annex E). Together, these mines represent almost 10 per
cent of
gold production in Ghana. The selection of stakeholder groups
within the communities was informed in part by our
consultations with the mining companies and the traditional
authorities in the area as shown in Figure 29.

Figure 28: Main stakeholder groups at the national level


Ministries, departments
and agencies 26%
Development
partners 17%

Mining sector related


companies 17%

Parliamentarians 14%
CSOs and think
tanks 14%
Private sector
associations 10%
Educational
institutions 2%
Source: Field survey.

44

Mining
in Ghana
What future
can we expect?
Mining:
Partnerships
for Development

MiningMining:
in Ghana
What future
can we expect?
Partnerships
for Development

44

Figure 29: Main stakeholder groups at the community level

3.2
Key findings

Traditional
councils 39%

The majority of community stakeholders hold the view


that the large-scale mining companies have contributed
noticeably to increasing overall economic benefits.
Community stakeholders especially feel that the sector
has a positive impact on employment and that business
opportunities have opened up in the surrounding
communities. As Figure 30 shows, a large majority of the
community stakeholders (86 per cent in total) feel that
the mines employ a greater number of local people.
Some highlighted that mining remains one of the main
sources of formal employment and although people locally
employed were generally at the bottom of the national pay
scale, mining jobs tend to pay higher than other sectors.

Local government
institutions 36%

CSOs 17%

Similarly, the majority of community-based stakeholders


believe that these mining companies provide both direct
and indirect business opportunities for the community;
communities referred to a number of large direct
contracts available to supply the mines in areas such as
catering, security and transport services. Moreover,
communities referred to several indirect business
opportunities that
they believe have emerged from supplier companies to
the mining sector. They mention that hospitality and
distributive trade in the mining communities depend
largely on the depth of mining activities in the catchment
areas. They also hold the view that farming has benefited
as demand for agricultural products increased via direct
demand from mining companies as well as from the
aforementioned hospitality services.

Security services 4%
Mining sector
related companies 4%
Source: Field survey.

Figure 30: Impact of mining on recruitment and local business activities


Direct recruitment of locals
12%

Very positive

Local business opportunities

21%
65%
67%

Positive
5%
11%

Negative
5%

No effect
2%
Cannot tell

7%

5%

10%

20%

Source: Community stakeholder interviews.

30%

40%

50%

60%

70%

80%

Local views

Communities referred to a range of immediate positive


economic opportunities and the effects on their daily
lives, especially in access to improved social amenities.
However, survey respondents from national-level
institutions saw only limited economic opportunities.
About one-third of mining-related companies and half of
CSOs and private sector associations believe that there
is limited participation of Ghanaians and that limited
employment opportunities are provided by the mining
sector. Respondents from sector-related ministries,
departments and agencies, and parliamentarians, focused
on the adverse impact on livelihoods, even when data to
support some of the viewpoints is generally weak or
non-existent. General observation of this group of
respondents was that while there has been an increase
in business opportunities for locals, jobs have been
mostly low paid, with limited upward mobility, and
local businesses have limited capacity to execute
contracts offered by the mines.
Stakeholders from the communities also acknowledge
that they are more dependent on social investments from
mining companies, which they see as part of companies
social responsibility. Communities have come to expect
fewer interventions from their local authorities, observing
that the mining companies are more receptive to their
demand for social support than the local authorities.
Key social investments by mining companies, mainly in
education and health, constitute critical basic
infrastructure in the communities. Examples of highvalue interventions cited are the provision of junior
secondary schools, clinics, boreholes and recreation
centres.
Figure 31 shows that the impact of social investments is
perceived as being largely uniform across gender and
by generations for the reason that improvements in
social amenities, especially clinics, schools and water,
are generally shared community goods. Communities
attributed the positive impact to the fact that what
companies provide aligns with their development needs
and pointed out that social investments have generally
been less effective when there has been poor dialogue
between mining companies and communities.

Local views

Figure 31: Impact of social investments perceived


on different community groups

Cannot tell 12%

No effect 12%

Men

Positive 76%

Cannot tell 10%

No effect 12%

Women

Positive 78%

Cannot tell 10%

No effect 10%

Children

Source: Community stakeholder surveys.

Positive 80%

Fifty-seven per cent of


development partners and
50 per cent of parliamentarians
highlighted the importance of
enforcing the already existing
laws.

To improve the impact of the sector, Figure 32 shows that


83 per cent of CSOs and 75 per cent of private sector
associations believe that the Government of Ghana should
strengthen the institutional framework especially to
enhance revenue management, local content and Ghanaian
participation, and ensure greater environmental protection.
Fifty-seven per cent of development partners and 50 per cent
of parliamentarians highlighted the importance of enforcing
the already existing laws, and stressed that Ghana has
sufficient legislation; the problem is often in the clarity of the
legislation and hence in the effectiveness of implementation
and enforcement.

Figure 32: Ideas that would improve the impact of the sector, according to different stakeholder groups
Strengthening the policy,
fiscal and legal framework

Enforcement of laws and policies

14%
14%

Suppliers

Increased legislation

43%

33%
CSOs

83%

17%
75%

33%

Private sector
associations

Development
partners

75%

57%

43%
0%

Ministries,
departments
and agencies

27%
27%

36%

0%

Parliamentarians

50%
17%

10%

20%

30%

40%

Sources: National and community stakeholder surveys.

50%

60%

70%

80%

90%

100%

Although environmental issues were outside the scope of


the study, without exception stakeholders highlighted the
negative impacts on the environment as a whole (see
Figure 33). These range from land use and water issues
to
conflict with livelihood activities in the mining communities.
Community stakeholders were, however, unable to
determine how much of these environmental impacts could
be attributed to large-scale mining and how much to the
increasing activities of artisanal and small-scale miners,
whose largely unregulated operations in the field have
intensified in the past decade.

However, it is generally acknowledged by well-informed


stakeholders of the mining industry in Ghana, and this
position is backed by Environmental Protection Agency data
(AKOBEN Audits), that most adverse environmental impacts
of mining cannot be attributed to large-scale mining but
to unregulated artisanal mining and to a lesser degree
small-scale mining. In addition, about one-third of the
stakeholders indicated social vices such as prostitution
as a negative impact of mining.

Figure 33: The percentage of stakeholders that identified one of the specific negative effects that mining brings about
Destruction of environment

100%
88%

Collapse of livelihood
66%

Health problems
37%

Social vices
17%

No negative effect

20%

40%

60%

80%

100%

Sources: National and community stakeholder surveys.

It is generally acknowledged by
well-informed stakeholders of
the mining industry in Ghana,
and this position is backed by
Environmental Protection
Agency data (AKOBEN Audits),
that most adverse environmental
impacts of mining cannot be
attributed to large-scale mining
but to unregulated artisanal
mining and to a lesser degree
small-scale mining.

48

Mining in Ghana What future can we expect?a

Mining: Partnerships for Development

Emerging priorities
for action

Image courtesy of The Ghana Chamber of Mines

4
Emerging priorities for action
General expectations about the future
contribution of mining to Ghanas
socioeconomic development have never
been greater. This report has assessed
past and present contributions and
has used the findings and projections
from a sample of mining companies to
project possible future contributions.

Emerging priorities for action

On 29 April 2015, over 70 representatives from mining


communities, government, mining companies, development
partners, private sector organizations and civil society were
brought together to discuss the preliminary findings of the
report. Based on group discussions and the findings from the
analysis, five emerging priorities for action are identified here
that could enhance minings future contributions.
There are ample opportunities to further increase minings
contribution to the economy of Ghana and to mitigate the
effects that stem from the projected decrease in gold
production. Five emerging priorities for action are identified
below. In order for these to be taken forward, a forum to
collectively identify concrete actions and agree roles,
responsibilities and timelines for tackling the five priorities
in an collaborative manner would be a useful first step.
Within the partnership arrangements that are identified,
there will be distinct roles for government agencies, the
Chamber of mines, mining companies, mining industry
suppliers, development partners and CSOs (the latter two
being particularly relevant in the capacity building space).
1. Improve the mining policy framework
Initiated in 1999, Ghanas mineral policy remained in
draft form and received minimal public debate until
December
2014. Only then was it ratified by Cabinet. In anticipation of
the White Paper release, it is hoped that the key policy pillars
are consistent with the provisions of the key existing
legislation and clearly defines the governments aspirations
in relation to the role mining is expected to play in the future.
A clearly defined mining policy framework should be linked
to the countrys development plan and industrial policy.
The latter must recognize the role of mining and how
government intends to collaborate with the sector to
concretely design and implement ways to enhance minings
contribution to future inclusive growth.

The current treatment of


mineral revenues as part of
general revenues into the
consolidated fund dilutes the
important contribution of
mining in the eyes of the
public, and does not recognize
the need to convert mineral
revenues into long-term
physical and human capital.
50

Mining in Ghana What future can we expect?

Mining: Partnerships for Development

Although putting in place an explicit policy does not


necessarily guarantee good legislation (especially with
legislation already in place and where policy changes are
inevitable) the advantage of a clear policy is that it provides
discipline and guidance: discipline for the legislative and
regulatory framework, and guidance for the behaviour of all
stakeholders.
2. Provide greater clarity on the management and use of
mineral revenues
Closely related to the broader mining policy is the need for
public conversation on how Ghana intends to manage and
share its mining revenues to enhance socioeconomic
development, especially at the local level where mining
operations take place. Currently mineral revenues are
treated as part of general revenues in the consolidated
fund. This dilutes the important contribution of mining in the
eyes of the public, and does not recognize the need to
convert
mineral revenues into long-term physical and human
capital.
Moreover, the sub-national distribution formula of mineral
revenues has no legal backing nor does it address
contemporary challenges in all mining areas, especially in
northern Ghana. The formula for distributing mineral
revenues applies to stool land revenues and is therefore not
applicable to areas where traditional authority is not linked
to land ownership. The application of the formula to
emerging mining communities in the North where land is not
owned by the traditional authority poses a challenge. Mineral
revenue legislation similar to that which exists for the
petroleum sector and within it defining the rationale and
the formula for sub-national distribution will improve
transparency
and accountability.
3. Develop a comprehensive national action plan for
more local procurement
The scenario analysis illustrated that if minings local
procurement increases by 25 per cent, the impact on the
Ghanaian economy would be US$50 million in terms of value
added and about 9,000 additional jobs. Linked to a broader
industrial development policy, increased local procurement
would deepen linkages with the non-mining sector of the
economy. Opportunities for linkages exist in the supply of
food items (including those that can be used to cater for
mine site staff); banking and insurance services; light
manufacturing in cyanide, grinding media, machinery spares,
crusher spares, pumps and spares, safety equipment, motor
spares, metal working and chemicals; and business
services. For government, deeper local content also means
additional sources of tax revenues, directly through mining
companies purchases from suppliers and indirectly through
further rounds of spending both through income and
consumption taxes. A strong local industry, with technically
skilled local employees, is also considerably more attractive
to investors. However, this requires collaboration and an
appropriate platform to share information, agree on a
shared vision and strategy, monitor progress and make any
necessary corrections to the national action plan for more
local procurement.
Mining: Partnerships for Development

If minings local
procurement is increased by
25 per cent, the impact on the
Ghanaian economy would be
US$50 million in terms
of value added and about
9,000 additional jobs. If
linked to a broader
industrial development
policy, linkages with the
non-mining sector of
the economy would deepen.
Priorities for action identified during the workshop
discussions and suggested for each key stakeholder group
are noted below.
Government of Ghana and Ghana Chamber of Mines:
Collaborate with the Minerals Commission in monitoring
the compliance of companies to local content regulations.
Anticipate obstacles in compliance with legislation for
mining companies and local suppliers.
Provide opportunities for local suppliers to learn more
about items selected for local sourcing and inform about
the standards of quality required.
Mining companies:
Continue collaboration with government in the detailed
assessment of items that are feasible to be produced
in Ghana.
Explore opportunities with existing suppliers or make a
co-ordinated effort to start (a portfolio of) companies to fill
the needs of mining companies.
Work with local business to improve the quality and service
delivery of their products over time to meet the standards
of the mining industry.

Mining in Ghana What future can we expect?

51

Emerging priorities for action

4. Develop a strategic framework for social investments


and align it with local authority spending
The life cycle analysis for the seven mines shows that social
investments are likely to decline. This demonstrates the
imperative for mining companies to develop a strategic
framework for their social investments in such a way that
they contribute to development to the fullest extent
possible and align with other company contributions and
with government spending. This point is reinforced by the
survey results whereby stakeholders from the communities
acknowledge that they have become more dependent on
the public services made available by mining companies
through their social investments.
A first step to achieving better company and government
alignment will be for the Government of Ghana to clearly
define the role of local governments in the provision of
social goods and services. This will enable mining
companies both collectively and individually to begin to
to align their social investments with local authority
spending plans, as well as taking a strategic view of
these investments for example, prioritizing those which
nurture small local enterprises. Helping to develop the
local private sector through small enterprise
development creates additional jobs and generates
incomes that will help communities become selfsustaining. Development partners can play a role in this
by providing a platform
for information sharing, project identification
and monitoring progress.
5. Build capacity with different stakeholders From our
analysis and the outcomes of the multi- stakeholder
workshop, there are several areas where capacity can
be enhanced. A first example is within government
institutions, whereby a focus on logistics and enhanced
training will better enable the monitoring and tracking
of mineral revenues as dictated by the
sub-national distribution formula. Secondly, the mining
industry has an opportunity to be more proactive in
communicating its contributions and impacts to all
stakeholders, as well as managing expectations. This will
enhance mining communities understanding of the
mining industry, including mining processes, the mining
life cycle, legal rights of communities and how mining
companies contribute to social and economic development
through their core and voluntary investments and activities.
A third example is the need to provide management,
finance and operational training to entrepreneurs and
small businesses in order that they are able to develop
products and services that meet the requirements of
the mining sector and beyond.

52

Mining in Ghana What future can we expect?

The mining industry has an


opportunity to be more
proactive in communicating its
contributions and impacts to
all stakeholders, as well as
managing expectations.
This will enhance mining
communities understanding
of the mining industry,
including mining processes,
the mining life cycle, legal
rights of communities and how
mining companies contribute
to social and economic
development through their
core and voluntary
investments and activities.

Mining: Partnerships for Development

References

Image courtesy of Newmont Mining Corporation

R
R

References

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Mining
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What future
can we expect?
Mining:
Partnerships
for Development

Ghana Statistical Service (2012a).


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_2011.pdf

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Revised gross domestic product 2011.
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-2012.pdf

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_Report.pdf

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report. Accra, Ghana, GSS.
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in Ghana
What future
can we expect?
Partnerships
for Development

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Ibrahim, M S (2013).
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%20of%20Ghana.pdf

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Newmont Ghanas Ahafo mine.
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environmental/Newmont-Ghana-Ahafo-Mine-Socio-economicImpact-Study-Report_v001_b14e5m.pdf

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GEP2015a_chapter2_regionaloutlook_SSA.pdf

Image courtesy of The Ghana Chamber of Mines

A
nn
ex
es

Annex A
Input-output methodology

Input-output modelling is used to assess the socioeconomic


impact of the sample of mining companies on the Ghanaian
economy. Simply stated, an input-output model provides a
road map of an economy and shows the interrelationship
between various sectors. This road map is called a social
accounting matrix (SAM).
Financial data from the sample of mining companies is run
through the model to see how the revenues and expenditures
affect other economic sectors and generate income (salaries
for households, profits for companies, and tax and non-tax
revenues for government). Figure 34 illustrates the process
of using financial, GTAP, macroeconomic and employment
data to quantify the socioeconomic impact. Value added and
employment are the indicators we use to address
socioeconomic impacts. The economic definition of value
added is used: the sum of salaries, taxes and profits that
accrue to Ghanaian residents or entities, and measure
employment in headcount.

When the gold-related money flows in the economy are


traced, four different rounds of impact can be distinguished
(see Figure 35) from which the following is constructed:
direct impact from mining companies
indirect impact from direct suppliers of the mining
companies
indirect impact from suppliers of suppliers
induced impact from the re-spending of salaries paid by
mining companies and all its direct and indirect suppliers.
With value added, induced results are not included. Doing so
would amount to double-counting (salaries would be counted
when earned and then when spent). Because induced
employment does not suffer from double-counting, it is
included throughout this report. The next section discusses
in more detail the input, output and outcome of the inputoutput methodology.

Figure 34: Overview of the modelling approach


Financial data from sample
of mining companies

Allocation of financials to
economic sectors

Estimated procurement and


value added for the sample
of mining companies

GTAP data

Macroeconomic data

SAM for the Ghanaian


economy

Employment data

Employment intensities for


the economic sectors

INPUT

OUTPUT

Value added and


employment multipliers
per sector

OUTCOME

Direct and indirect effects


of the sample of mining
companies on value added
and employment in Ghana

FINAL RESULT

Source: Steward Redqueen.

Figure 35: The four rounds of direct, indirect and induced effects on value added and employment indicators

Direct impact sample of mining companies


Effects directly related to local expenditures of the mining companies
Indirect impact direct suppliers
Effects arising at suppliers of goods and services in the value chain of the mining companies.
Indirect impact suppliers suppliers
Effects arising at the suppliers of goods and services of the mining companies suppliers

DI
RE
C
T
V
AL
UE
C
H
AI

Indirect impact re-spending of salaries


Effects caused by the re-spending of salaries that are paid by the mining companies, its suppliers and its suppliers suppliers

MI
NI
N
G
S
TO
TA
L
IM
P

Source: Steward Redqueen.

58

Mining
in Ghana
What future
can we expect?
Mining:
Partnerships
for Development

MiningMining:
in Ghana
What future
can we expect?
Partnerships
for Development

58

Annex A
Input-output methodology

Input

Output

Financial data from sample of mining companies


The following seven mines provided data (based on planned
production figures at the start of 2014 and assuming a gold
price of US$1,300 per ounce) on sales volume and revenue,
capex, opex, social investments, tax payments, mine closure
cost and employment figures for the period 2010-22:

Allocation of project financials


As input for this study, payments by the sample of mining
companies have been disaggregated and aggregated based
on the economic recipients in the Ghanaian economy. Here a
clear division is made between national recipients (providers
of goods and services, households and Government of Ghana)
and recipients abroad (through imports of goods and services).
The basis for these exercises are the allocations provided by
the mining companies. However, if not available, Newmont
Ahafo (for which a very detailed breakdown is available see
Steward Redqueen 2013) serves as a proxy to allocate the
payments to national recipients and abroad.

Adamus Resouces
Chirano Gold Mines
Gold Fields Damang
Gold Fields Tarkwa
Golden Star Wassa
Newmont Ahafo
Newmont Akyem.
GTAP data
For Ghana, the most recent data with which to construct
the SAM is from 2007 and is taken from the GTAP 8 Data
Base (Global Trade Analysis Project 2012). The SAM is the
key ingredient of the methodology and is explained in more
detail below.
Macroeconomic data
To be representative, 2013 GDP data (sector and
expenditure breakdowns) from the GSS has been used to
update Ghanas SAM. In addition, macroeconomic figures
such as gold production, GDP, labour force and government
revenue have been obtained from sources including the
Bank of Ghana, Ministry of Finance and Minerals
Commission.
Employment data
The employment data per economic sector is derived from
the 2010 Population and Housing Census conducted by the
GSS (Ghana Statistical Service 2013). These figures have been
extrapolated to 2013 to account for the growth of the labour
population. From that, so-called employment intensities
per sector are determined (ie the number of jobs needed to
produce a million dollars of output).
Because of the importance of the informal sector in Ghana,
the methodology differentiates between formal and informal
job intensities.15 Not distinguishing between formal and
informal employment would cause an underestimation of the
number of indirect jobs, as the informal part of the economy
is more labour intensive than the formal one (see the section
Employment intensities below for more details on the use
and treatment of employment data).

15 In line with findings presented by Khan (2012) and Schneider, Buehn and
Montenegro (2010) we have assumed that about 65 per cent of national
output is formal and 35 per cent is informal; and in line with findings from
the 2010 Population and Housing Census from the GSS (Ghana Statistical
Service 2013), we assume that about 15 per cent of the labour force is
formally employed and the other 85 per cent is working in the informal
sector.

Social Accounting Matrix (SAM)


The key ingredient of the input-output model is the SAM,
which describes the financial flows of all economic
transactions within the Ghanaian economy. As Figure 36
shows, in the SAM the number of columns and rows are
equal because all sectors or economic actors (industry
sectors, households, government and the foreign
sector) are both buyers and sellers. Columns represent
buyers (expenditures) and rows represent sellers
(receipts). Final consumption induces production, which
leads to financial transfers between the various sectors,
which in turn generate incomes for households and
government (taxes) and profits (dividends and savings).
The SAM is a statistical and static representation of the
economic and social structure of Ghana; and since
economies are subject to change, SAMs should ideally be
periodically updated. For Ghana, the most recent SAM dates
back to 2007 and has been taken from the GTAP 8 Data Base
(Global Trade Analysis Project 2012). Using data from the GSS
and the Bank of Ghana, the SAM has been updated to 2013
using the RAS method (Fofana, Lemelin and Cockburn 2005).
Assumptions
The main assumption of an input-output analysis is that an
increase in demand can be met by an increase of production
at constant prices in all affected sectors of the economy.
In reality, however, certain sectors will not feel the effect
of an increased demand for the product and so will not
experience an increase in production. There may also be
sectors unable to increase production at constant prices
because of shortages, for example in labour, raw materials
or production capacity. The possible exception might be
skilled labour.
Since many households are also farmers, their so-called
auto-consumption (consumption of self-produced products)
is unlikely to be affected. In the model, all household
expenditures on food crops, and on livestock by agricultural
households, have therefore been excluded. This approach
produces a much more robust and realistic estimation of
induced employment effects, which are often significantly
overestimated.

Annex A
Input-output methodology

Figure 36: Social accounting matrix

Manuf
acturi
From
ng
To
Ag
ric
Agriculture
ult
Manufacturing

Sa
m
pl
coe
m of
pami
ni ni
es

Investments
Exports Taxes
Household
consumption
Retail
Rows indicate how
each sector/stakeholder
receives money

Sample of mining
companies
TRANSFERS

Retail
Households
Taxes
Imports

CONSUMPTION

Consumption induces production leading to


INCOMES

NON-MARKET

transfers of money between sectors leading to


incomes for households and governments

Dividends/savings
Columns indicate how
each sector/stakeholder
spends money
Source: Steward Redqueen.

Employment intensities
Because this report focuses on 201022 results, the
employment breakdown from the 2010 Population and
Housing Census has been extrapolated to the years for
which total labour force figures were available. This means
that for
201113 employment figures have been extrapolated and for
the period 201422 the year 2013 serves as the reference
year.
By using the employment data and the output derived from
the national SAM, we calculated employment intensities.
The employment intensity shows the number of jobs per
one unit of output. That intensity is then multiplied by the
amount of output that is supported by the sample of mining
companies to estimate the total number of jobs supported
(differentiating between formal and informal jobs). These
employment intensities have been determined using data on
the formal and informal output and employment per sector.
Data gaps have been compensated using the following
assumptions:

In line with findings from the 2010 Population and Housing


Census from the GSS (Ghana Statistical Service 2013), the
assumption is that about 15 per cent of the labour force is
formally employed and the other 85 per cent works in the
informal sector.
The breakdown of the average and formal output and of
employment figures over the different industries has been
done using information from the GSS as well as insights
from ACET and Steward Redqueen.

Outcome
Value-added and employment multipliers
Making use of the national SAM, value-added and employment
multipliers are calculated. These multipliers are used to
determine the impact on different dimensions such as impact
per round, per industry and per value-added component.

In line with findings presented by Khan (2012) and


Schneider, Buehn and Montenegro (2010), the assumption
is that about 65 per cent of national output is formal
and 35 per cent informal.

Annex B
List of stakeholders interviewed

Table 3: Stakeholders interviewed

In addition to undertaking desk research forwardlooking analysis based on company data we undertook
consultations with key stakeholders to better understand
the impact that the mining sector has had on the economy
as a whole and especially on mining communities and
livelihood alternatives. Table 3 provides an overview of all
stakeholders interviewed.

Annex A
Input-output methodology

National-level stakeholders (based in Accra)

Government of Ghana
institutions

State institutions

Private sector organizations

Mining sector related


companies

Civil society organizations


and non-governmental
organizations

Organization

Position

Name

Ministry of Trade and Industry

Director of Policy Planning,


Monitoring and Evaluation

Mr. George Kobina Fynn

National Development Planning Commission

Deputy Director

Dr. Addo-Yobo

Ministry of Local Government and Rural


Development

Director, Policy

Mr. Obeng Poku

Forestry Commission

Desk Officer for Mining,


Corporate Office

Charles Dei Amoah

Geological Survey Department

Director

Dr. Kwasi Adu

Ghana Revenue Authority

Officer in Charge of Mining

Mr Chris Ocansey

Ghana Statistical Service

Officer in Charge of
Industrial Statistics

Anthony Krakah

Water Resource Commission

Principal Water Resources


Engineer

Dr. Bob Alfa

Precious Minerals Marketing Company

Chief Business
Development Officer

Jacob Essel

Minerals Commission (Inspectorate Division)

Chief Inspector of Mines

Mr. Obiri-Yeboah
Twumasi

Ghana Extractive Industries Transparency


Initiative

National Coordinator

Franklin Ashiadey

Association of Ghana Industries

Executive Director

Mr Twum-Akwaboah

Ghana Mineworkers Union

Research Officer

Sampson Agyapong

Ghana Chamber of Commerce and Industry

CEO

Mr Badu-Aboagye

Private Enterprise Federation

Director General

Nana Osei-Bonsu

Africa Mining Services

Compliance Manager

Peter Bennett

Multi-Tech Services

General Manager

Ulrik Jacobson

Orica Ghana

Business and Regional


Manager West Africa

Francis Decker

Zen Petroleum

CEO

William Tewiah

Outotec Ghana

Head Marketing Unit W/A

Enoch Kusi-Yeboah

Pelangio Exploration

Exploration Manager

Samuel Torkornoo

Vivo Energy Ghana

Corporate Communications
Manager

Shirley Tony Kum

Artisanal and Small Scale Mining-Africa


Network

Director, Policy and


Research

Edward Akuoko

Integrated Social Development Centre

Policy Analyst
Director

Bernard Anaba
Dr Steve Manteaw

Third World Network

Coordinator

Yao Graham

IBIS

Officer in Charge of Mining

Mohammed Mahamud

Natural Resource Governance Institute

Africa Regional Coordinator

Emmanuel Kuyole

Centre for Social Impact Studies

Executive Director

Richard Ellimah

IMANI

Research Assistants

Kofi Boahene and


Patrick Stephenson

Annex B
List of stakeholders interviewed

Table 3: Stakeholders interviewed continued


Parliament
Organization

Position

Name

Ahafo Ano South West

MP

Hon Johnson Kwaku Adu

Prestea/Huni-Valley

MP

Hon Francis Adu-Blay Koffie

Abuakwa South

MP

Hon Samuel Atta Akyea

Bibiani/Anhwiaso/Bekwai

MP

Hon Kingsley Aboagye-Gyedu

Kade

MP

Hon Asamoah Ofosu

Parliamentary select
committee

Mines and Energy

Committee Member

Hon Benjamin Kofi Ayeh

Development partners

Canadian Embassy

Trade Commissioner

Peter Fiamor

Deutsche Gesellschaft fr
Internationale Zusammenarbeit

Senior Advisor, Extractive


Resource Governance

Allan Lassey

Swiss Embassy

Counsellor and Head of


Cooperation
Financial Sector Specialist

Brigette Cuendet

Australian High Commission

Senior Program Manager

Ebenezer Aryee

Netherlands Embassy

First Secretary Water and


Climate

Fred Smiet

European Union

In Charge of Mining

Herve Delsol

World Bank

Environmental Specialist

Felix Oku

Institute for Environment and


Sanitation Studies, University of
Ghana

Director

Professor Chris Gordon

MPs for mining areas

Educational institutions

Magnus Ebo Duncan

Annex B
List of stakeholders interviewed

Table 3: Stakeholders interviewed continued


Community stakeholders

Government of Ghana
institutions

Traditional authorities

Organization

Position

Name

Sefwi-Wiawso Municipal Assembly

Municipal Chief Executive

L A Santana

Land Valuation

District Land Valuation


Officer Bibiani

P J Abakah

Ministry of Food and Agriculture

Agricultural Economist

Andrew Agyemang

Ministry of Local Government

District Coordinating
Director

John Nana Owu

Bibiani/Anhwiaso/Bekwai

District Chief Executive

Jacob Ware

Ghana Cocoa Board (Cocoa Health and Regional Manager


Extension Division)
(Western North)

Mr. Samuel Amponsah

Forestry Commission

Assistant Manager Forest


Services Division-Bibiani

Gilbert Ampofo

Physical Planning, Prestea/


Huni-Valley District

Technical Officer

Charles Ofosu

Prestea/Huni-Valley District

District Crop officer

Theophilus Siaw Asare

Subri Community

Chief

Nana Kwabena Amponsah

Nyamebekyere Community

Chief

Nana Ekumfi

Nyamebekyere Community

Queen mother

Felicia Amponsah

Koduakrom Community

Chief

Nana Peter John Offei

Damang Community

Chief

Nana Amoakwa III

Amoanda Community

Chief

Nana Kofi Ngoro II

Wassa Fiase Traditional Council

Paramount Chief

Osagyefo Dr Kwamena Enimil VI

Aboso Community

Chief

Nana Kofi Kyei II

Aboso Community

Secretary to the Chief

Nana Bosco Quainoo

Damang Mine Communities


Consultative Committee

Secretary

Seth Gyimah

Damang Mine Communities


Consultative Committee

Spokesperson

Peter Amoh

Amoanda

Youth Chairman

Francis Badoo

Damang

Youth Chairman

J K Mensah

Damang Mine Consultative Farmers


Association

Chairman

Solomon Ankomah

Amoanda Community

Opinion Leader

Kwadwo Addo

Koduakrom Community

Opinion Leader

Emmanuel Odoom

Amoanda Community

Opinion Leader

Stephen Prah

Bosomoiso Community

Chief of Bosomoiso

Nana Kwaku Nkuah

Wiawso Community

Paramount Chief of Wiawso

Nana Kwasi Bumakama

Akoti

Chief of Akoti

Nana Kwasi Oppong II

Paboase/Community Consultation
Committee

Chief of Paboase and Community


Cosultative Committee Chairman

Nana Frimpong Manso

Aboduabo Community

Chief of Aboduabo

Nana Amankwah Gyeabour II

Etwebo Community

Chief of Etwebo

Nana Yaw Gyam II

Anhwiaso

Paramount Chief of Anhwiaso

Ogyeahoho Yaw Gyebi II

Table 3: Stakeholders interviewed continued


Community stakeholders

Local authorities/government

Security services

Mining sector related


companies

Civil society organizations


and non-governmental
organizations

Organization

Position

Name

Damang

Assemblyman

Hon Francis Toku Aubynn

Amoanda and Bompieso

Assemblyman

Hon Elvis Adjei-Duah

Subri

Assemblywoman

Hon Agnes Amponsah

Aboso Community

Assembly man

Hon Justice Abroquah

Aboso Community

Assembly man

Hon Clement Saah

Aboso Community

Assembly man

Hon George Nyerisew

Koduakrom Community

Unit Committee Member

Afriyie Siaw

Paboase Electoral area

Member

Hon Joseph Amoah

Prestea/Huni-Valley District

District Coordinating Director

Yaw Adu Asamoah

Ghana Police

District Crime Officer Wiawso

Assistant Superintendent of
Police Kwadwo Amakye Ansah

Fire Service

Fire Commander Sefwi


Wiawso Municipality

Thomas Tettey

Top Quality Catering

General Manager

Bruce Starleen

Newco Catering & Logistics

Site Manager

Horveh Amevordji

Allterrain Services, Damang

Supervisor

Agnes Anietey

District Farmers Association

District Chief Farmers


Secretary

Anthony Kofi Gyebi

Annex C
Workshop details

April workshop program


Time

Topic(s)

9am

Registration

9.15am

Introduction of Chair

Ahmed Nantogmah

Opening remarks

Mr Sulemanu Koney, CEO Ghana Chamber of Mines

Opening of the workshop

Hon Nii Osah Mills, Minister Lands and Natural Resources

9.45am

Speaker(s)

Presentation of draft findings


1. Introduction and overview

Ms Kate Carmichael, ICMM

2. Macroeconomic background

Dr Joe Amoako-Tuffour, ACET

3. Impact methodology

Dr Ren Kim, Steward Redqueen

4. Life cycle impact results

Dr Ren Kim, Steward Redqueen

5. Survey results

Dr Joe Amoako-Tuffour, ACET

6. Q&A
11.30am

Breakout sessions
1. Local economic development
Including coffee break
2. Revenue management
3. Social investments

12.30pm

Feedback to plenary

1pm

Closing of workshop

1.30pm

Lunch

Mr Sulemanu Koney, CEO Ghana Chamber of Mines

Annex D

Annex C
Workshop details

Key policy developments in Ghanas mining sector

Workshop overview
The purpose of the workshop held on 29 April 2015 was
to serve as a forum to discuss and debate the initial
findings from the study, and discuss and identify practical
opportunities for multi-stakeholder collaboration where
mining companies, government, international organizations
and civil society could work together to improve the social
and economic outcomes from mining in Ghana. The
workshop was attended by more than 70 stakeholders,
representing a broad cross-section of the government,
industry, civil society and donors.
Following welcoming remarks from Mr Sulemanu Koney
(CEO of the Ghana Chamber of Mines), the workshop was
formally opened by the Honourable Minister Nii Osah Mills
(Minister of Lands and Natural Resources). The Honourable
Minister Mills said:
While mining has been a key driver in our strong economic
growth, the industry has even greater potential to improve
the well-being of all Ghanaians. The best way to make that
a reality is for all segments of society to be part of planning
a definite future for mining in Ghana and seeing to its
implementation. Mining therefore has an integral part to
play in our economy.
After that Ms Kate Carmichael (Manager Social and
Economic Development of ICMM) gave an introduction and
Dr Joe Amoako-Tuffour and Dr Ren Kim presented the
draft findings of the study. This was followed by breakout
sessions, where participants split into three groups to
exchange ideas and discuss practical steps that could be
taken to strengthen partnerships for development in the
Ghanaian mining sector.
The breakout sessions focused on three areas: local
economic development, revenue management and social
investments.
The discussion about local economic development was
focused on local procurement and ways to enhance this.
Most participants agreed that the best way to do this was by
constructing a comprehensive national action plan for more
local procurement and linked industries.

During the discussion about revenue management, all


participants agreed that the Government of Ghana is best
placed to manage and co-ordinate the revenue streams
that come from mining. However, it was brought to the floor
that in order for Ghana to benefit more, in terms of
economic development, a clear mining revenue policy
should be defined.
In the session on social investments, the discussion revolved
around better aligning social investments of mining
companies with the development plans of local authorities,
managing expectations of local communities and being more
transparent about where money (including royalties) is going
and what it is spent on.
Afterwards the discussion leaders shared the key
takeaways from these different sessions with the audience
and
Mr Sulemanu Koney gave his closing remarks on the day.

Table 4 provides an overview of the key policy


developments in the mining sector of Ghana. Most policy
developments have been about regulating and promoting
small-scale

mining and strengthening the collection, transparency and


management of mineral revenues.

Table 4: Some key developments in Ghanas mining sector policy

Year

Policy initiative focus and objectives

Key developments

2004

A revolving gold credit of refined gold was created to


increase value addition in gold through jewellery production

This involved the College of Jewellery and the Precious Minerals


Marketing Company with the assistance from some mining
companies

To promote value addition in diamond production

Diamond-cutting plant was licensed to process local diamonds

Establishment of an alternative livelihood program to sustain


mining communities after cessation of mining activities

Minerals Commission involved chiefs and landowners in targeted


communities for oil palm plantation development

To diversify the minerals base of the economy and increase


investment in the subsector, Government of Ghana planned to
step up airborne geographical surveys and improve presentation
of geological data and mineral information to investors

Government of Ghana planned to undertake an airborne


geophysical survey of the entire Volta Basin to increase data on
the nations mineral resources and improve presentation of
geological data and mineral information to investors

Promotion of sustainable small-scale gold mining operations

The ministry identified three areas in the Western Region and


Winneba in Central Region for small-scale mining operations

2006

To diversify the minerals base of the economy and increase


investment in the subsector through greater monitoring of the
exploration and mining activities

Public awareness campaigns on the new Minerals and


Mining Law

2007

Increase in mineral royalties to use the mining industry as a


catalyst for development

Mineral royalties increased from 3% to 5%

2005

Greater monitoring and evaluation of operations for safety


2008

Greater diversification in small-scale mining

Exploration of opportunities in small-scale diamond mining

Greater regulation in diamond mining in light of the Kimberley


Process Certification Scheme

All small-scale diamond brighter future miners and


buyers registered and given identity cards to facilitate
monitoring, reduce smuggling and comply with the smallscale diamond sector

2009

Greater Government of Ghana monitoring and evaluation of


exploration companies and mining companies to ensure
compliance with mining agreements

2010

Government of Ghana review of dividend payments, exemptions


and the mining sector fiscal regime

Government of Ghana increased engagement with mining


companies on their contributions under the fiscal regime

Measures to address social issues in mining communities and


equitable distribution of mining revenues

Draft guidelines introduced on the use of mineral royalties by


district and municipal assemblies
Surveys undertaken to establish baselines data on social
conflicts in mining communities

Changes to when mineral royalty payments are paid

Change in when and how often mineral royalties are paid

Establishment of multi-agency mining revenue task force

Increase in audits of mine operations

Fiscal policy developments to increase revenue from the sector

Corporate tax rate increased from 25% to 35%

2011

2012

Introduction of a windfall tax of 10% collected from all


mining companies
Capital allowance of 20% for 5 years for mining companies
Establishment of a national renegotiation team to critically
review fiscal regimes and mining agreements
Support to small-scale mining groups

Support provided to purchase equipment and working capital

Annex E

Annex D
Key policy developments in Ghanas mining sector

The mine project life cycle

Table 4: Some key developments in Ghanas mining sector policy continued

Year

Policy initiative focus and objectives

Key developments

2013

Measures to strengthen the regulatory framework

To give full effect to Act 703 on the governance of the industry,


six mining regulations were passed by parliament

Building institutional technical capacity in contract negotiation

Review of existing stability agreements was to be expedited in


order to negotiate new standards for the sector

Policy to help address developmental issues in mining


communities

Ministry of Lands and Natural Resources facilitated the


passage of the Mineral Development Fund

Policy to increase local content development

Greater enforcement of the ban on registration and participation


of foreign companies in small-scale mining
Promotion of capacity building of local entrepreneurs

2014

Presidential directive to establish an inter-ministerial task force


to eradicate illegal mining activities

5,000 foreigners engaged in the sector were deported

Measures to improve collection, transparency and


management of mineral revenues

A multi-agency task force was established to enhance


co-operation and collaboration among revenue agencies and
the Minerals Commission

A new reporting format was developed by Minerals


Commission to report illegal mining activities

Ministry of Lands and Natural Resources seeks to continue


to provide a necessary platform for greater transparent
engagement for all stakeholders
Support to sustainable small-scale mining

Sources: Ministry of Finance Budget statements from 2004 to 2014.

Ministry of Lands and Natural Resources planned to establish a


small-scale mining competency training centre at University of
Mines and Technology, Tarkwa to offer training to small-scale
miners in proper mining practices

The life cycle data provided by the sample of mining


companies is all based on seven mines that are currently
operating. However, how these mines spend their money
and the impact they have differs. One of the reasons for
these different spending patterns is that the mines are all
in different phases of their projected life cycle. Figure 37
shows a stylized representation of a mine life cycle and
distinguishes five different phases:
exploration
site design and construction

All seven mines that provided data are currently in the


operation phase. This is, however, not the case for the
entire period this study covers. One mine was in the site
design and construction phase up to 2013 and another
mine is expected to close around 2019. Understanding that
different phases have different characteristics is
important (eg capital expenditure and direct employment
is highest during construction) in order to understand the
nature and timing of the contributions presented in this
report.

operation
final closure and decommissioning
post-closure.

Figure 37: Stylized representation of the life cycle of the mine

Exploration
110 years
or more

Site design and


construction
15 years

Operation
2100 years

Final closure and


decommissioning
15 years

Postclosure
A decade to perpetuity

Stylized profile of government revenue contributions (right hand axis)


High

Labour/activity level

Level of government revenues

High

Low

Source: ICMM.

Time

Low

Acknowledgements

This work was led by a team from Steward Redqueen and


African Center for Economic Transformation (ACET).
Steward Redqueen is a specialized consultancy firm which
helps business to enhance their impact on society while
ACET provides research, policy advice, and capacity
enhancements that African governments can use to
transform their economies, reduce poverty and improve
living standards. The reports lead authors are Dr. Ren
Kim and Mr. Tias van Moorsel from Steward Redqueen and
Prof. Joe Amoako-Tuffour and Ms. Sarah-Jane Danchie
from ACET (with research assistance from Maame Esi
Eshun and Frank Adu). Much of the analysis in the report
relies on data provided by the Ghana Chamber of Mines,
especially
Mr. Sulemanu Koney and Mr. Christopher Opoku Nyarko as
well as a working group made up of representatives of
participating mining companies in Ghana. Kate Carmichael
initiated and led the process on behalf of ICMM, with support
from Eva Kirch.
The analysis was done between June 2014 and June 2015.
Insights and feedback from a multi-stakeholder workshop
held on 29th April, 2015, which was attended by more than
seventy (70) stakeholders; representing a broad crosssection from government, industry, civil society and donors,
have
also been incorporated into this report.
Special thanks go to those colleagues in Ghana that were
actively engaged in the working group and took the time out
of their busy schedules to make the necessary data
available to our team. The working group comprised the
following representatives:
Emmanuel Osei Kesse
Adamus Resources
Saban Parimah
AngloGold Ashanti
Nii Ofei Mante
Chirano Gold Mines
Nana Afuah Okoh
Gold Fields Ghana Ltd
Shaddrack Adjetey Sowah
Golden Star Resources
Dan Quaye
Golden Star Resources
Derek Boateng
Newmont Ghana

Thanks are also due to the participants of the April


workshop and the staff at the Chamber, especially
Mr. Ahmed Nantogmah and Ms. Dorothy Oforiwaa Ocran,
who worked tirelessly to ensure the success of the
workshop. We are grateful to all attendees for sharing
their perspectives on a range of opportunities and
challenges facing the mining sector. In particular, we
commend the Honorable Nii Osah Mills (Minister for
Lands and Natural Resources) for formally opening the
workshop, Mr. Sulemanu Koney for providing welcoming
and closing remarks, Prof. Joe Amoako-Tuffour and
Dr. Ren Kim for presenting the results of the analysis
and Mr. Emmanuel Kuyole for facilitating the breakout
sessions. The contributions made at the workshop, and
those emerging from the break out session discussions
and many bi-lateral meetings, have immeasurably
improved our understanding of the key issues in mining
in Ghana.
The team would also like to extend its sincere thanks
to the staff at the many participating agencies of the
Government of Ghana, participating mining companies,
civil society, local communities and many other
organizations and individuals for their generous help,
support and encouragement during the assignment.
The results and conclusions in this report are
Steward Redqueens and ACETs responsibility
alone. The assignment has been undertaken on the
basis of strict objectivity and independence.

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2015 International Council on Mining and
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ISBN: 978-1-909434-14-1
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