Gold rush tests Ghanaian government’s approach to business

Ghana was known under British rule as the Gold Coast because of its rich deposits of the precious metal that drew European colonists to the country.A century and a half later, another intercontinental gold rush is again causing social and diplomatic tensions in the west African nation.Chinese money has been the driving force behind a surge of illegal, small-scale gold mining known colloquially as “galamsey”.The mines are notorious for poor safety and environmental standards, with untreated waste polluting rivers with toxins including arsenic, cyanide and mercury. President Nana Akufo-Addo has set up an armed anti-galamsey task force, known as Operation Vanguard, to clamp down on the mines, leading to hundreds of arrests and some violent clashes. “The president has staked his credibility on dealing with this problem,” says one western diplomat.Mr Akufo-Addo has been careful to avoid blaming China — Ghana’s biggest bilateral trading partner — and it is true that many locals and other nationalities are also implicated.Do they want to chase quick money through extractive, transactional relationships? Or do they want to build long-term partnerships with international investors who follow the rule of law and create shared value?Small-scale “artisanal” mining has gone on for centuries in Ghana, where fragments of gold can be found, with luck and local knowledge, in soil or river sediment without need for deep excavation. But this romantic practice has become increasingly commercialised and Chinese entrepreneurs and migrant workers are often at the forefront.China says it supports efforts to stop illegal mining and to encourage Chinese people engaged in the practice to go home. However, the Chinese mission in Accra has complained of “distorted” media coverage of the issue, exposing strained bilateral relations.Ghana is hardly alone in discovering that Chinese investment can be a mixed blessing for resource-rich African countries. How Mr Akufo-Addo deals with the galamsey problem will provide wider signals about Ghana’s direction.“Do they want to chase quick money through extractive, transactional relationships?” asks the western diplomat. “Or do they want to build long-term partnerships with international investors who follow the rule of law and create shared value?”While showing toughness through Operation Vanguard, Mr Akufo-Addo has at the same time promised new opportunities for communities to engage in legitimate mining.Looking for a speck of gold © AFPSulemanu Koney, chief executive of the Ghana Chamber of Mines, which represents the industry, says larger mining companies are supportive of bringing small operators into the mainstream. “Illegal mining causes reputational damage to the whole industry,” he says.Cleaning up the galamsey sector is part of a broader push to make mining a more sustainable part of the economy. There is potential for a stronger domestic supply chain to provide mining services and equipment; and the government wants to diversify beyond gold into bauxite mining. “The aim is to integrate mining more into the wider economy so it is a generator of value not just revenues,” says Mr Koney.A big test of Ghana’s competitiveness is a looming decision by AngloGold Ashanti, the world’s third-largest gold producer, on the proposed redevelopment of its mothballed Obuasi mine 240km north-west of Accra. Production was suspended after commodity prices fell in 2014 but thousands of illegal miners subsequently invaded its tunnels and resumed extraction.Eric Asubonteng, general manager of the Obuasi mine for Anglogold, reports “positive progress” on talks with government over taxes and royalties. “They are very supportive of getting the mine reopened and we’re working with them to make that happen,” he says. There would be fewer jobs than the 5,700 people employed at Obuasi’s peak. Reopening is conditional on modernisation of the 120 year-old mine — one of Africa’s largest — to make it more efficient. But those jobs that are created would be higher-value, safer and more sustainable, says Mr Asubonteng.“We are positive about Ghana because the macroeconomic environment has improved and there is a pro-business government,” he adds.“When we look at challenges in South Africa, Tanzania and the DRC [Democratic Republic of Congo], we think Ghana is well positioned.”

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