Mad rush for our gold --who benefits? June 18, 2013 (Front page)

THEY come from all parts of the world to look for the most popular metal, gold.
Many come through the legal means, while some come through the back door.

But where are they coming from?
 

They travel from neighbouring West African countries such as Togo, Benin, Nigeria, Niger, Burkina Faso, Mali and Cote d’Ivoire, while, from very far away, illegal operators journey from Asia, the Americas and Europe, particularly China and Russia.

These immigrants first seek concession from the Minerals Commission, after obtaining some information on Ghana’s investment opportunities from the Ghana Investment Promotion Centre (GIPC).

Other prospectors come to Ghana under many guises — tourists, investors and visitors — but end up joining hands with small-scale miners to plunder the country’s resources.

Ghana is rich in gold, from south to north, east to west, but this rich resource does not reflect on the people, especially those living in the mining communities.

This is a paradox, as renowned mining companies reap good returns from their investment following the rise in the world price of gold.

Two years ago, the government even introduced a windfall tax to ensure that the people benefited from the rising market price of gold.

 The mining companies are blue-chip all over the world, such as Newmont, the second biggest mining company in the world, AngloGold Ashanti, Goldfields Ghana Limited, Golden Star Resources and Adamus Mining Company.

These registered mining companies contribute their quota to our development efforts through the payment of dividends and royalties to stools and district assemblies, as well as the provision of some social responsibility projects.

But just as the people have issues with “galamsey” operations because they follow no laid down procedures, the big companies have also not been the best of friends to residents of the mining communities.

The residents accuse the mining companies of repatriating their huge profits abroad, paying meagre dividends and royalties to the government, the stools and district assemblies, while the people still remain impoverished.
Ghana, Africa's second-largest gold producer after South Africa, has proven gold reserves of about 985 tonnes, accounting for three per cent of global production.

At a time gold is recording a windfall on the world market, Ghana's abundant gold has, over the past decade, attracted gold miners from all over the world. The country’s most precious mineral has become a magnet which is drawing a league of foreigners who want to escape the harsh economic conditions in their countries.
So massive is the foreign invasion that the Southern China Morning Post, for instance, estimated that the number of Chinese miners in Ghana, mainly from China’s Shanglin Province, looking for gold was about 50,000.
 

This month alone, the Interministerial Task Force established by the government to flush out illegal miners arrested 224 foreigners, mainly made up of Chinese, Russians, Indians, Nigerians, Togolese and Nigeriens.
A recent TV programme exposed Ghana’s vulnerability and how its mining areas are not protected from foreign invasion. 

The reality TV show, entitled Jungle Gold and aired on DSTV’s Discovery Channel, showed cameras following two Americans in search of gold close to the Birim River, even though mining is prohibited at least 100 metres close to Ghana’s water bodies.

Illegal foreign miners have a rather sneaky way of entering the small-scale industry. It takes only seeing the chief of the mining area and paying the lease to him to get mining concessions which, otherwise, are prohibited by the law.

Section 83 of the Minerals and Mining Act , Act 703 , 2006 states clearly that foreigners cannot engage in small-scale mining.

After mining the riches, the illegal miners leave behind polluted holes that now blotch water bodies, destroy farms and have proved too much for local communities.

Long before small-scale mining was formalised in 1986, Ghanaians in mining communities across the country who felt left out of mining jobs in the formal sector always found underground pits tempting and fruitful.
That was what gave birth to the expression 'gather and sell', which has been corrupted to 'galamsey' in Ghana. 

There are currently two types of small-scale miners — those who have mining leases from the Minerals Commission and are regulated and those who undertake the activities illegally
Buoyed by the lavish lifestyles of their compatriots who have found wealth in the belly of the earth, thousands of unemployed people have joined the fray.

With the authorities adopting a rather lax attitude towards illegal mining, coupled with dubious characters, including traditional leaders, who are in league with foreigners with the money to invest in the small-scale mining sector, the door has been opened for foreigners barred by the mining law from operating in the trenches of the small-scale sector.

The history

Once known as  the Gold Coast, Ghana has a reputation for its gold production, which has been carried out by local people using artisanal techniques since at least the 15th century before the arrival of Europeans.
The Europeans, with better technology in some areas, took over the mining and even built forts and castles along the shores of the Gold Coast to protect their interest in various merchandise, including minerals like gold.
Until 1986, small-scale mining was illegal in the country. The Provisional National Defence Council (PNDC) government, however, opened the door to people in mining communities, ostensibly to aid rural development.

Why the illegal mining boom

The illegal mining operations in Ghana according to industry watchers  have resulted from the mining boom and weakness of regulatory institutions.
“The mining boom resulted in government granting m
ining concessions in many parts of the country, including forest reserves. Places such as Kenyase where illegal mining is booming now were pure farming areas where no mining activities were taking place,” Mr Daniel Owusu-Koranteng, the Executive Director of WACAM, a mining advocacy group, told the Daily Graphic.

“The weak regulation of our institutions, weak immigration enforcement, the increasing gold price and strong local network made up of chiefs, opinion leaders, politicians and security agencies have helped to fuel the illegal mining. Galamsey operations used to be carried out with small implements but now the involvement of foreigners from all over the world has turned it into a large-scale operation with the use of heavy machines and chemicals such as cyanide,” he said.

In effect, the galamsey operators follow the trails of the big mining companies and this is fuelled by the factor of the loss of livelihood by the local people. For example, government has granted mining lease for Newmont to mine in Ajenua Bepo forest reserve in New Abirem area. The people in the area had been farmers all along and now some of the communities like Yayaso have been resettled and also lost their livelihoods.

Mr Owusu predicts that “once Newmont starts mining in the Ajenua Bepo forest reserve, we should not be surprised if illegal mining starts and booms in the forest reserve”.

He also pointed out that the Chinese presence in the mining sector had been because they entered the small-scale mining sector on the basis of providing ancillary support in the form of selling machines to the regularised small-scale sector.

“The Minerals Commission granted them licences to provide such ancillary support and then they ended up mining gold. In some cases , some of the legal small- scale miners only took the mining licences and then fronted for the Chinese,” he said.

However,  Mr Jerry Ahadzi, a Principal Officer of the Minerals Commission, said the commission was no longer working with that provision.

“Shaanxi Mining Company Limited in Bolgatanga  is the only Chinese  company we have given such a permit,”  he said.

The company provides mining support services for two registered small-scale mining groups in the Upper East Region.

Besides the rising price of gold being a contributory factor to the illegal mines, many of the illegal miners have complained about the long bureaucratic process that applicants have to go through to acquire permits. It could take a year or more to acquire permits because of some factors, including environmental impact assessment.

The Statistics
Data from the Minerals Commission, the body mandated to process permits for mining concessions in Ghana, are staggering. According to the figures, 589 mineral right applications were processed in 2012. Out of that, 442 applicants are in search of wealth in the small-scale sector (gold).  The other permits cover 86 for exploration; 36 for quarry; nine for salt and sand winning and 16 for mining leases.

Out of the 589 applications , 489 were granted in 2012, while  the rest were granted during the first quarter of 2013.

While the number of small-scale miners  in Ghana is unknown, unconfirmed  estimates  put  the figure at between  30,000 and 500,000.

Figures from the Ghana Chamber of Mines (GCM), which is the voice of the mining industry, pegged the number employees on the payroll of it members at 14,257 as of  2011.

Who benefits?
Debate over whether the country has been deriving benefits from its mines has been intense, with industry players arguing strongly that the mining sector has been paying its dues to Ghana’s economy.

 But critics argue that the contribution of mining to the country’s  economic development does not reflect in the economic well-being of the people.

According to figures from the GCM and the Ghana Revenue Authority (GRA), the mining and quarrying sector contributed GH¢1,461,202,977 to the Internal Revenue Service between 2010 and 2011.

The chamber listed its contributions to Ghana’s economy in 2011 to include about GH¢1 billion to the GRA, representing 27 per cent of the total GRA collection in that year. 

The mining sector, according to the GCM data, also paid GH¢645 million in corporate tax to the GRA, representing 38.26 per cent of the total company tax collected in 2011.

Voluntary contributions by mining companies to host communities as part of their corporate social responsibility amounted to GH¢43 million.

Additionally, the mining companies keep 75 per cent of their revenues at the Bank of Ghana and the commercial banks, as against the statutory requirement of a minimum of 25 per cent.

The GCM capped its list of achievements with being the leading attractor of foreign direct investments into the country.

These achievements notwithstanding, Mr Owusu-Koranteng observed that “sometimes we make the mistake of thinking that the revenue from mining constitutes profit, without accounting for the environmental and social cost of mining. Mining is associated with huge environmental, social, economic and human rights violations”.

He urged the government  to undertake a cost-benefit analysis of mining  that would take into consideration the huge environmental, social, economic and human rights cost of mining.

Ghana's mining policy is still a draft .The country does not have an operational mining policy, which means that despite the mining boom, the sector is operating  without a policy direction — a sure recipe for chaos and the mess which reflects in the mining sector.

Ghana attracted mining investment with very generous incentives in the fiscal regime which helps companies repatriate  a greater percentage of their profits.
That, the WACAM boss said, was unfair.

“The mining act protects the rights of mining companies and not the rights of the communities. The mining communities lose their lands, their rivers are polluted, they lose their long-term livelihoods, some of them are resettled in areas without land for them to continue their livelihoods and they are paid very low compensation which does not restore their livelihoods. There is also the destruction of sacred groves, forest reserves and rivers which serve the cultural needs of the people and give them identity.

“If we factor in all the social, environmental and economic costs, we will realise that we are not benefiting from mining,” he added.

But Dr Tony Aubynn, the Chief Executive Officer of the GCM, had a contrary opinion.

According to him, the facts, figures and studies on the sector and its contributions to the economy said otherwise.

“If an industry is contributing 28 per cent of internal revenue, contributing over 42 per cent of export merchandise, employing about 21,000 people, then what else do we expect the industry to do?” he asked.

Citing a 2007 study on the mining sector in Ghana which was commissioned by the International Council on Mining and Metals, he said the country had benefited enormously from the mining sector.

The report assessed the positive and negative socio-economic impacts of mining projects in Ghana and concluded that at the national level, mining in Ghana had provided a strong positive influence on the recovery of macroeconomic growth after 1986.

Additionally, those living close to mining operations had benefited from poverty reduction and improvement of social welfare indicators.

 “However, local communities feel not enough is being done. This is partly attributable to unmanaged expectations, such as that AngloGold Ashanti would take over local government functions in the absence of public service delivery,” it said.

In that regard, Dr Aubynn said, “We don’t define exactly what we expect. If you go to certain mining communities, you will see schools, clinics, teachers’ bungalows and scholarships supporting thousands of students. All these are done by mining companies.”

He said there were no facts behind assertions that the mining communities were not benefiting from the minerals in their communities, saying, “We are not distributing it the way that should benefit those who are impacted directly.”

Dr Aubynn said the difficulty was how to make the benefits visible, as it was the state that decided on investing in projects that benefited the entire country while retaining only per five cent of the royalties in mining communities.

Counting the  cost...

Unlike the mining companies who post bonds that could be used in restoring  their operational areas if they fail to reclaim the land after their operations, illegal miners have no such mechanisms. After filling their pockets with the minerals, gaping holes are left uncovered.
This environmental degradation in some instances have become death traps for communities.

Disasters and deaths


Illegal mining in Ghana may be lucrative but the rate at which giant mining pits swallow miners is rather alarming.
On June 28, 2010, about 112 small-scale miners working in a mining pit owned by Adoboa Mining and Trading Enterprise at Akyempem-Breman in the Upper Denkyira East municipality were trapped underground after torrential rains had hit the mining site and forced the pit to cave in.
On November 12, 2009,  an illegal mining pit collapsed at Dompoase in the Ashanti Region, killing eight workers, as well as 13 women who worked as porters for the miners.
On April 15, 2013, 16 bodies, including those of two females, were retrieved from a spent-mining pit at Kyekyewere in the Upper Denkyira East municipality in the Central Region.

Human right abuses

Critics of the mining sector say in spite of the huge profits made from the mines by the mining companies, there are gross human rights abuses in some mining communities across the country. Indeed, the findings of a report on the state of human rights in mining communities in Ghana launched by the Commission on Human Rights and Administrative Justice (CHRAJ) in 2008 showed evidence of widespread violation of human rights of individual members of communities and communities’ collective rights in some mining areas in the country.




The report found evidence to conclude that there had been widespread pollution, deprivation and loss of livelihood. Several examples of excesses by the security agencies and security contractors of the mining companies were provided and documented, including inadequate compensation for destroyed properties, unacceptable alternative livelihood projects, absence of effective channels of communications and consultations between the companies and the communities, excesses against galamseyers, health problems attributed to mining, reckless spillage of cyanide and unfulfilled promises of employment.

It noted that complaints of human rights violations were more prevalent in communities affected by AngloGold Ashanti’s operations in Obuasi and Golden Star Resources’ operations in Prestea and Dumasi.
 In many of those cases, the violations were against alleged ‘galamseyers’ who are encroaching upon concessions of these companies.

Water crisis


That is not all; water bodies, especially rivers, that serve as sources of water for many communities across the country are left polluted. This either increases the cost of water treatment or, in some cases, threatens to shut down water treatment plants in Kyebi, Bunso and Anyinam, all in the Eastern Region, and Odaso in the Ashanti Region.
The use of mercury and cyanide by illegal miners in water bodies compels the Ghana Urban Water Company Limited (GUWCL) to spend a lot of money on chemicals to treat the polluted water for distribution, thereby increasing the cost of production.

The Water Resources Commission (WRC) has marked rivers Pra, Offin, Birim and Ankobra as the most polluted water bodies in Ghana.

In fact, civil society groups, including WACAM, the Centre for Environmental Impact Analysis and the Humanity Focus Foundation, predict that Ghana may face severe water crisis in 2025 if nothing is done about the problem.


 

While agreeing that pollution resulting from illegal mining remained a threat to water bodies in Ghana, Mr Ben Ampomah, the Executive Director of the WRC, declined to comment on the prediction of the three civil society organisations, saying, “I am yet to read the report, hence cannot comment.”
He, however, said the illegal mines posed a great threat to Ghana’s water security.

Tackling the galamsey

While the inter-ministerial task force established to crack down on illegal mining is commendable, stakeholders hold the view that  its sustainability is key. There is also the need for a sustained awareness creation to reduce illegal small-scale mining in the country, with its accompanying environmental degradation and deaths.

 For Mr Owusu Koranteng, addressing the problem would “require a mix of strategies, including education and sensitisation, taking legal action against offenders, addressing the unemployment problem in mining communities and gaining the support of the affected communities in all strategies in order to sustain the solutions”.

Mr Ahadzi also shares similar sentiments, saying that practically the crack down on the illegal miners is appropriate.

Dr Aubynn, on the other hand, called for a critical look at the timelines for permits.
“It must not be flexible because of the environmental issues. We must not compromise on the environment but a certain level of speed is necessary,” he said.

The way out

From all indications, the country's challenges with illegal mining is about jobs. The big mining companies have been accused of not creating enough jobs to absorb unemployed youth in the mining areas.

While the inter-ministerial taskforce may succeed in flushing out the illegal miners, the reality is that the miners would return to the trenches and the pits if no alternative livelihood is provided for the thousands of illegal miners.

This point was echoed by Mr Ampomah, who said, "The illegal miners are there because of they want to earn a living. In the long term, we need to take a look at creating an alternative livelihood for them or manage the mining sector in such a way that illegal mining becomes a thing of the past.”

The country produces over 2 million ounces of gold per annum. In spite of this level of production, there is no refinery in the country and the bullion is exported for final refining. Even though a feasibility study has confirmed the viability of refining gold in Ghana, it still remains a project in the proverbial pipeline.

Hundreds of jobs can be created if the country begins to add value to minerals from the industry.

According to the GIPC, opportunity also exists for setting up downstream production facilities to manufacture key inputs for the mining industry, such as mill balls, drill bits, cyanide, activated carbon and also commemorative coins, jewellery and electronic component.



Do you know that ...

* In 2003, the Forestry Commission undertook some research which indicated that the bush meat trade was about $200 million to $300 million annually. In the same year, mining revenue amounted to about $46.7 million, which meant that the country received about five times more from one indicator of standing forest than it did from mining,

* The South African government, in May, announced that it will develop a rescue plan to ensure the long-term sustainability of South Africa's embattled platinum and gold mining sectors. This has become necessary because the sectors had been negatively affected by persistent global market factors which had had an adverse bearing on their long-term viability.

Fact sheet

*Ghana remains the 10th largest gold producing country in the world (2nd in Africa), 10th in bauxite production, and ninth both in diamond and manganese production (2006 ratings).
*
The Mineral Development Fund bill is currently before the Cabinet. The passage of this bill will improve the method of royalty disbursement to mining communities.

*Ghana’s total earning from gold export in 2012 was $4.4 billion. The 2011 figure was $3,937 billion.

*Ghana's total gold export was 4.2 million ounces in 2012, compared to 3.6 million ounces in 2011.

*Between 2009 and 2012, Ghana received $3.5 billion as investment inflows into mining.

*The 2013 budget announced that the government would pursue the introduction of the 10 per cent Windfall Tax for the mining sector, so that the country could earn a little more from the increasing world market gold prices.

*According to the GCM, the average aggregated cash cost of production for mining firms in Ghana rose 9.8 per cent to 751 dollars per ounce in 2011, compared with the 684 dollars an ounce recorded in 2010.

Ghana’s mining sector employs a large number of Ghanaians (about 20,000 in the formal sector; estimated 500,000 in the small-scale gold, diamond and quarry productions and 6,000 in mine support services).

*Over the years, more than 25 million ounces of gold have been mined at the Obuasi mine. Since mining operations commenced in 1873 at the Bogoso Mine, more than nine million ounces of gold has been produced, largely from extensive underground operations.


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