Ghana’s Mining Sector: More harm than good?
Mr. Daniel Owusu Koranteng makes a case against mining in Ghana at the 2011 Public Eye awards ceremony in Davos, Switzerland
Ghana has had a long history of mining, especially of gold. However, the country is still largely underdeveloped with about 80% of its 24 million people living on less than US$2 a day, according to the World Bank.
In 2001, Ghana signed onto the Highly Indebted Poor Country (HIPC) initiative and benefited from massive debt relief. But this development also drew attention to how the country had failed to turn its mineral wealth into an economic asset in order to help the populace find ways out of economic hardship and poverty.
“Mining has never been beneficial to Ghana. The closer you are to mining communities, the poorer you get. So the idea of getting economic development from mining as praised by the World Bank/IMF has been defeated,” said Daniel Owusu-Koranteng, Executive Director of Wassa Communities Affected by Mining (WACAM). According to him, the country’s over-dependence on mining has done the country more harm than good.
“One of the objectives of the Economic Recovery Programmes spearheaded by the Bretton Woods institutions, the World Bank and IMF, was to increase Ghana’s dependence on mining for economic transformation with the aim of reducing poverty. Yet it has produced the reverse,” added Mr. Owusu-Koranteng.
In spite of this criticism, the mining sector, especially gold, continues to rake in billions of dollars every year, with the commodity currently leading the country’s export earnings, surpassing cocoa, which had for a long time been the country’s biggest export earner.
On average, mining has contributed about US$2 billion per annum to Ghana’s GDP in the last decade and with gold prices currently doing well on the world market, that figure could stay high for a long time to come.
However, as most of the gold mining concessions belong to private investors, the mining sector’s contribution to Ghana’s GDP does not mean that the revenues belong to the Government and people of Ghana.
Generally, the government retains just a 10% carrying interest in mining companies to which it grants a license. So legally, that is all Ghana and Ghanaians may own in the mining operations in Ghana, other than for various levies, fees, licenses, taxes and royalties that the government imposes on mining companies.
Mr. Owusu-Koranteng, who founded WACAM, more than a decade ago, believes that the harm mining has done to the environment and livelihood of people in mining communities can never be compensated by the US$2 billion revenue earnings of the country’s mineral resources.
A study by WACAM conducted two years ago in Obuasi and Tarkwa, two of Ghana’s biggest mining towns, found that about 250 river bodies have been polluted through mining activities.
According to WACAM, the polluted water and air in these mining communities poses serious health hazards to the people, who have been found to be experiencing various illnesses, such as skin and chest diseases including Tuberculosis. Diseases, such as diarrhoea, malaria, typhoid fever, dizziness and persistent headaches, were found to be prevalent in the areas where the study was conducted. “ Waste disposal is a major problem in mining. So eventually you will realise that we have given so much for so little,” says Mr. Cudjoe.
In 2010, the Environmental Protection Agency, (EPA), set up a task force to investigate allegations of indiscriminate disposal of cyanide into some water bodies in the Ahafo concession of one of the mining firms, Newmont Ghana. The EPA found the company culpable and fined it US$8 million.
“With our mining code, we have made mining so attractive to investors that the state suffers. With non-renewable assets such as gold, once you take it, it is gone and you cannot replace it. Who is going to address the problems that result from it (mining)?” Mr. Owusu-Koranateng said.
“Gold prices are so high currently. When the gold price is high, mining companies increase their rate of mining. When this happens, the gold reserves reduce at a faster rate,” he said.
A study by one of Ghana’s renowned agricultural researchers, Prof. Kasim Kasanga, has shown that one cocoa tree has the capacity to yield about half a bag of cocoa a year over the economic life span of the tree of about 50 years. And with the producer price of a bag of cocoa pegged at GH¢200, advocacy groups contend that mining companies impoverish cocoa farmers in the long run by making a one-off compensation payment of at most GH¢15 per cocoa tree destroyed. Advocacy groups contend that this is especially true if one considers that one cocoa tree can generate at least GH¢100 on a sustained annual income basis to a farmer for over half a century.
“So if you (mining companies) are paying a one-off payment of about GH¢6,000 for crops that have been destroyed, you are only impoverishing the people. But the bait is that because some of the farmers have never seen such a quantum of money paid to them at once, they are happy to receive them and few years down the line, they come back to where they were,” said Owusu-Koranteng.
“So sometimes when we say companies are not paying compensation, it is not really about not paying compensation per say but what we mean is that they are not paying compensation based on the principles in the Minerals and Mining Act,” he explained.
Agriculture, which employs 80% of the population, seems to have suffered from mining activities through the adoption and adaptation of modern technology, such as the heap leach method in surface mining. This method in mining has led to the mining of arable lands, a situation which has often sparked conflict over land use between farmers and companies with legally acquired mining leases. WACAM is of the view that the new Mineral and Mining Law does not effectively bind mining firms to address environmental situations in mining communities. According to the advocacy group, the law has numerous gaps that allow too much flexibility in the operations of mining companies, leading to excessive exploitation of minerals, land degradation, pollution of water bodies and the maltreatment of the people living in mining communities.
“Gold prices are on the rise now, and we did not even include in the new Minerals and Mining Law, a provision to allow us (the Government of Ghana) to negotiate a windfall profit. So it is the companies that are making a lot of profit from the high gold price. And on the other side, we are losing our gold reserves at a very fast rate,” Mr. Owusu-Koranteng said.
For over two decades, Ghana regulated the mining industry through PNDC Law 153, which had the main objective of attracting mining investment into Ghana. However, in 2006, the existing law governing mining in Ghana was reviewed, after several calls for reforms by both advocacy groups and mining firms. Still, advocacy groups such as WACAM believe the resulting Act of 2006, has reduced Ghana’s chances of laying claims to any economic benefit from mining activities and have described the new mining law as ‘neocolonial.’
“For example, PNDC law 153 set mineral royalties at between 3% and 12% of the gross total mined, which was based on the operating ratio of mining companies. However, in the Minerals and Mining Act, royalties was set at 6%.”
On the employment front, according to the Ghana Trade Union Congress, there are about 15,000 people engaged in mining in the country. Out of this number, the formal mining sector reportedly absorbs less than 1% of workers. However, this TUC figure seems quite inaccurate, as some gold mining companies on their own have more than 3,000 employees.
“We have not done a cost-benefit analysis of mining as a nation, to factor in the total environmental, social and even economic costs. According to Oxfam, mining accounts for 5% of Ghana’s GDP. Meanwhile, the environmental destruction of Ghana, which mining has contributed to in no small way, is estimated at 10% of Ghana’s GDP. Would you say this (mining) has been beneficial?” said Mr. Owusu-Koranteng.
“Even on employment, when you compare the number of people employed to the displacement of landlords who have dependants, there is a net deficit. So the saying that mining creates jobs is even a fallacy, especially when you look at the loss of livelihoods, human rights abuses, and environment destruction,” he said.
As Ghana celebrates its 54th independence anniversary it may be necessary for all stakeholders to revisit the debate of whether or not the country finds mining worthwhile in order to give true meaning to the concept of exploiting natural resources in a sustainable way.
All that glitters is not gold