Why Ghana needs Ahafo North Gold Mine
THE development of Ghana’s latest mine, which is owned by Newmont Mining Corporation to be situated at Ahafo North in the Ahafo Region, can resume after almost a year’s delay due to encroachment by land speculators.
Development of the mine was suspended last year in response to a campaign of calumny aimed at the American company by over a thousand ‘land speculators,’ who claimed that they were being thrown off their land without compensation to make way for an upcoming new mine.
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However, over the past few weeks, their noise has reduced to a whimper as Newmont, prodded by the Ahafo Regional Government – is now giving relief support of GH₵45 million payout to the speculators.
These land speculators hurriedly erected makeshift structures on the lands when it was announced as a mining area in 2017, in the hope of receiving a share of the generous land and property compensation that Newmont is known for, particularly during the development of its flagship Ahafo South mine next door.
The payment, which commenced in August 2022, has since seen over 1,400 of the 4,300 owners receiving payments.
The Coordinator for the Ahafo North Relief Support, Sylvester Amankwah-Koranteng, said he anticipated a speedy disbursement to initiate processes for the functioning of the mine.
“In terms of cash, we have a little over 23,000 Ghana cedis. We have about 9,791 structures in the data that we are using for repaying but about 90 of them do not have codes.
“Out of these 9,000, we have validated about 7,000 of them. These structures we are paying include hen coops and the usual village kind of washroom,” he added.
Those cries have now dimmed after the payment of relief support and Community leader, Charles Bright Boachie, is satisfied with the smooth disbursement of the relief support.
“We started very slowly but after that when the education went round people are now coming. People have understood the situation and they are ready to receive their money. The payment process is going on,” he said.
The upcoming resumption of the new mine’s development is excellent news for the Ghanaian economy, which is currently suffering a foreign exchange crunch and a lesser but nevertheless debilitating fiscal deficit financing crisis.
Boost to economy
The former has seen the cedi depreciate by some 35 per cent during the first eight months of 2022 alone and this, combined with the inordinate size of the public debt, has nearly doubled short-term interest rates since the beginning of this year as inflation has surged to over 30 per cent, its highest levels in two decades.
If the development of the mine was to resume this year, it will come on line as early as 2025. The Denver Colorado headquartered mining giant has already approved the US$750 – US$850 million required to build it and it will be developed and managed by Newmont Mining Ahafo, a company that has nearly two decades of experience, developing and managing the flagship Ahafo South Mine, which started production in 2006; by March 2019 had produced over 5.8 million ounces and has ramped up its annual production to between 550,000 and 650,000 ounces through 2024.
The Manager, Communications and External Relations of Newmont Ahafo Mine, Samuel Osei, is upbeat that the upcoming Ahafo North project will contribute immensely to the economy.
“The Ahafo North project presents a lot of prospects for the Ghanaian economy. Contractors who will also be employed may have more employees than what we have so this project presents a lot of employment opportunities for the people,” he said.
“There are also a lot of opportunities in the local procurement. For the general economy, we have enhanced taxes and royalties that will come to the local economy,” he added.
The upcoming new mine is expected to produce at least some 300,000 ounces of gold annually over a 13-year lifespan, which will make it one of Ghana’s most productive mines.
As with the Ahafo South Mine, Newmont expects to exploit upside potentials that will increase its production and/or extend its lifespan.
At current gold prices, this will translate to US$540 million in annual export revenues and even if only half of that finds its way back into the local forex market this will amount to US$270 million in extra forex supply, which in turn will exert palpable downward pressure on the cedi’s exchange rate against the US dollar.
Newmont cost
Even now, with the impasse with land speculators resolved at a significant cost to Newmont – which is now paying out GH₵45 million in what it instructively calls relief payments rather than compensation – it is still uncertain when the suspension on development of the mine will be lifted by Denver.
Just as importantly, the impasse itself has brought Ghana’s mining industry to its feet. Land speculation by dwellers in areas around places designated mining areas is not a phenomenon suffered by Newmont alone; other foreign-owned mining companies in particular always end up having to pay them off when developing a mine.
Newmont’s just-resolved challenges in this regard were the biggest and noisiest simply because it is the second mine the company seeks to have in the area; therefore, more people became aware of what they might rip off it.
Unfortunately for them though, Newmont, having learnt very expensive lessons from its two previous experiences in developing new mines in Ghana, was ready this time round.
Mapping
A comprehensive property mapping initiative, distinguishing which properties were permanently in place at the time the Mining Area was announced and which were makeshift ones hurriedly put up since then was done. The results have been mostly corroborated by a subsequent survey done by the Environmental Protection Agency (EPA).
However, the mining industry, through the Ghana Chamber of Mines, has warned that the antics of land speculators will no longer be tolerated. This though may be a hard call.
Even as the government recognises the importance of mining activities, the politicians that run it unfailingly consider the potential to win or lose votes first; votes that land speculators have and the owners of foreign mining firms do not have.
Besides, the government’s tendency to make mining companies appear villains to cover for its shortcomings in providing public socio-economic goods and services in gold mining areas (despite receiving royalties, which are spent elsewhere) comes home to roost by giving land speculators the confidence to do what they do.
Going forward though, government officials seem increasingly aware that mining companies are fed up with the situation. Ghana’s fall from the West African country receiving the most exploration spending by the global gold mining industry, to 4th place in this regard over the space of less than a decade is serving as a wake-up call.
One that should be heeded for the good of a national economy that desperately needs all the forex inflows and cedi tax revenues it can get.
