Galamsey apart, ‘marching forward to the past’
The current national focus on uprooting illegal gold mining also underscores to observers further question marks about the sector at the other end of the spectrum, concerning some of the major players and management issues.
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Following Lands and Mineral Resources Minister John Amewu’s ultimatum to the ‘galamsey’ people to stop their activities, there have also been calls for the Government to “nationalize” the mining industry. But is nationalization the appropriate remedy?
A few months ago, Professor Akilagpa Sawyerr highlighted some critical failures in the industry which are clearly worthy of attention by the new Government.
It was a passionate wake-up call by the Professor to those looking after Ghana’s gold mining industry supposedly in the national interest, but is the alarm he sounded being heeded?
Prof Sawyerr, President of the Ghana Academy of Arts and Sciences, expressed his concerns in an incisive address to the academy on November 15, 2016 under an intriguing heading, ‘Marching forward to the past: from Newmont II, back to Newmont I – via Gold Fields’.
As indicated, three important mining agreements were central to Prof Sawyerr’s presentation, Newmont 1, Newmont II and Gold Fields.
I hope that I have managed to convey the import of his paper in the following very abridged form.
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“Newmont I
“In 2003 a draft Investment Agreement was submitted to the Government of Ghana by Newmont Mining Corporation of Denver, Colorado, USA, in respect of mining leases held by its local subsidiaries for prospects at Ahafo in the Brong-Ahafo Region of Ghana and Akyem in the Eastern Region.
“The draft agreement was referred to the Minerals Commission for assessment and advice, as required by law … The Chairman of the Commission sent a report to the Minister of Mines, listing up to 33 grounds of objection to the draft ….
“The report ended with this observation:
"It is the view of the Commission that Government would be setting a bad precedent if approval is given to this Agreement in its current form quite apart from the fact that a number of the provisions . . . are contrary to the laws of this country." (Emphasis supplied)
“With no reaction from the Minister, as far as records show, with no further engagement with the Minerals Commission, and with none of the issues raised by the Commission addressed, the Investment Agreement was signed on 17 Dec., 2003. It was ratified by Parliament on Dec 18, 2003, one day after signature.
“Newmont II
“Six years later, in 2009 … the newly-elected President of Ghana, President J E Atta Mills, took advantage of a courtesy call by the head of Newmont Mining Corporation to press the point that the terms of 2003 Agreement needed urgent adjustment to bring it in line with contemporary realities.
“Newmont readily agreed to a renegotiation of the 2003 agreement …. Finally, in June 2011, a Technical Review Committee was set up to review Newmont I, and help move the process on.
“Following the recommendation of the Technical Review Committee, a National Mining Review Committee (MRC) was inaugurated on 31 January 2012, to review the national mining regime generally, and undertake the renegotiation of mining agreements with stability provisions. I had the honour to be appointed Chair of the Committee and Chief Negotiator for Government …
“The terms of Newmont II addressed virtually all the excesses pointed out by the Minerals Commission in 2003 and repeated by the Technical Review Committee in 2011…
“In addition to all these other positives, we got Newmont to agree to pay what amounted to a ‘signing on premium’ – an upfront cash payment of USD27million, duly paid to the Ministry of Finance a month after Parliamentary ratification of the agreements!
“It is this successful move to correct the lop-sidedness of Newmont I to the extent possible, and remain consistent with the continental drive to increase the share of the state in natural resources rent that is referred to in the title to this lecture as a forward march …
“It might be noted that the Newmont II agreements were concluded in November 2014 … (in) a total of 12 months from conclusion to ratification. Quite a change from Newmont I - ratified by Parliament ONE DAY after signature!
“Gold Fields
“As part of its original mandate, the MRC established and maintained contact with Gold Fields Ghana Ltd., one of the three leading mining companies in Ghana …
“Following the conclusion of the Newmont Agreements (Newmont II), the MRC began formal negotiations with Gold Fields in May 2015 …
“In August 2015 the MRC … suspended the negotiations in order to enable Gold Fields bring up its proposals for new investment … through the Minerals Commission …
“The MRC heard nothing further about this till February 2016, when it received the surprising news that a draft agreement had been settled between Government and Gold Fields, awaiting Cabinet approval and signature.
“As Chairman of the MRC, I asked for and received a copy of the draft agreements for review. After a hurried review I sent in comment on the draft, pointing out a number of what I considered serious flaws in the draft, concluding that:
“… on the basis of a quick assessment and for the reasons given above, the Gold Fields Development Agreements are …. unsupportable in their present form.”
“Though Cabinet reportedly took note of our comments and asked for appropriate modifications in the final draft, the Agreements were signed on 11 March 2016, virtually unchanged.
“They were tabled in Parliament on 16 March 2016 and referred to the Select Committee on Mines and Energy the same day. The Committee reported back the following day, 17 March!
“As reported in the Hansard, Parliament first waived the Standing Order requirement for a 48-hour wait, thereby enabling the motion for approval to be immediately put for consideration by the House.
“The motion, which was tabled at 9.30 pm, was approved and the Gold Fields Agreements were ratified at 9.40 pm. Thus, the substantial and complex investment agreements were ratified by Parliament after fully 10 minutes of discussion on the floor of the House, one day after they were first tabled, and one week after they were signed!
“It is difficult not to see the similarity between the circumstances surrounding Newmont I and Gold Fields – receiving Parliamentary ratification one day and one week, respectively, after conclusion of the agreements - in contrast to Newmont II, ratified a year after conclusion!
“However, the similarity/difference go beyond the rush and superficiality of the approval process in the first two cases …
“The terms of Gold Fields, like Newmont I, but unlike Newmont II, run counter to the continental trend and recent Ghana efforts to increase the state revenue share from mining enterprises, hence the reference to “MARCHING FORWARD TO THE PAST” in the title of this lecture.
“What is the basis for these give-aways by Government? …
“While the terms of Newmont II represented a substantial enhancement of the benefits Ghana enjoyed under Newmont I, the same terms in the Gold Fields agreement represented a reduction of what we had prior to the negotiations …
“In any event, we did not consider the outcome of Newmont II as ideal, such as would constitute a proper benchmark for future agreements …
“Leaving the Government so exposed is a glaring instance of technical incompetence on the part of our negotiators. What is surprising is that they had access to the Revised Newmont Agreement (Newmont II), which had addressed this particular defect!
“To sum it up, it is difficult to avoid the conclusion that, just as in Newmont I (2003),
- Ghana gave away more than we had to in the revised Gold Fields Agreements;
- the enhanced concessions given in the agreements were almost certainly illegal, and
- all this could have been avoided, had there been competent and committed negotiations on behalf of Ghana!
“But could this be put down solely to naivety? Ignorance? Incompetence? Hardly!
“Lessons
“What lessons are we to draw from this story? “a. Technical/Political
“The use of politician-dominated, non-expert bodies to conduct technical negotiations in Newmont I and Gold Fields - in the latter case bypassing a negotiating team that successfully renegotiated Newmont II and was available to undertake or back the technical negotiations.
“This wilful playing down of technical competence, professionalism and experience raises serious questions about the good intentions of the decision-makers and their commitment to the public good.
“The prime instance of this phenomenon was the famous Ghana Telecom-Vodafone case (2008) … (whose) outcome has been widely criticised as a sell-out of the national interest.
“b. Failure of institutional responsibility and oversight
“The Ministry of Lands and Natural Resources and the Minerals Commission failed in the discharge of their duty to ensure that the 2016 Gold Fields negotiations had the proper institutional base, and (were) conducted with diligence, competence and honesty …
“At least as grievous, was the complete failure of Parliament - both sides of the House - to treat the ratification process with the slightest seriousness.
“But, ultimately, the buck stops with the President of the Republic, in whom the Constitution of the Republic vests primary responsibility for safeguarding our natural resources and ensuring their optimal exploitation and management …
“Conclusion
“Failure to confront and deal with such matters has contributed to the entrenchment of mediocrity, corruption and cynical disregard of the public interest as the norm for managing national resources and public affairs …” Prof Sawyerr emphasized in his concluding statements.
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Evidently Prof Akilagpa’s caution is that the country’s mineral resource endowment, “a vital force for national development”, is additionally critical in the heritage agenda and the caretakers need to be conscious of that in all their decisions and actions.
I found particularly haunting three observations by the Professor:
- Ghana gave away more than we had to in the revised Gold Fields Agreements;
- the enhanced concessions given in the agreements were almost certainly illegal, and
- all this could have been avoided, had there been competent and committed negotiations on behalf of Ghana!
Will the Professor’s critique provide the impetus for comprehensive action, ‘galamsey’ apart, by Mr Amewu and where “the buck stops”: by President Akufo-Addo?