Ghana’s bauxite must remain under state control

About four months ago, there was huge public outcry when in August this year, the Ministry of Lands and Natural Resources revoked the lease granted to Exton Cubic Limited to mine bauxite in the Tano-Offin Forest Reserve in Nyinahin in the Ashanti Region.

The revocation to the company, owned by Mr Ibrahim Mahama, a businessman and younger brother of former President John Dramani Mahama, which acquired the concession to prospect for bauxite, was interpreted by many political commentators as political witch-hunt.

What made the whole exercise murky was the reasons the Minister of Lands and Natural Resources, Mr John Peter Amewu, assigned for the abrogation of the contract that “the company failed to meet the legal requirements, and especially its failure to obtain environmental and operational permits, as well as the various statutory infractions, leading to the purported grant of the three mining leases to the company which render the purported leases invalid and of no effect.”

This action by the government sparked a lot of condemnation from a section of the public which claimed that the government was deliberately side-stepping one of its own, whose activities in the Nyinahin and adjoining communities were poised to create over 1,000 jobs for the youth in that community.

The government, justifying its action, quoted some sections of the law in accordance with the Environmental Assessment Regulations, 1999 (L.I. 1652), to submit an Environmental Assessment form (EA2), Environmental Impact Assessment, Scoping Report, Environmental Impact Statement, an annual Environmental Report to the EPA and a liability estimates of environmental degradation.

Till date, no definite decision has been taken on the Exton Cubic/Government of Ghana stand-off, but Ghanaians are waiting with bated breath to learn about the outcome of the suit filed by Exton Cubic to challenge the decision of the government to revoke its licence.

History of Nyinahin bauxite

The raw material of alumina was first discovered in Ghana in 1914 in the Atewa Range by Sir Albert Kitson. Bauxite is an ore and the main source of aluminium. Though the British Aluminium Company gave approval for the mining of bauxite in 1928 at Awaso in the country’s Western Region, the exploration and mining works started only in the 1940s. Ghana has substantial deposits of bauxite at other places such as Ejuanema, Nyinahin and Kibi, though most of them remain unexploited with mining activities mainly undertaken in Awaso.

Ghana was admitted to the membership of the International Bauxite Association in November 1974. Ghana Bauxite Company has been working on the mining site in Awaso since 1941, and it is said to have enough reserves to last for more than three decades. Other bauxite reserves of Ghana are said to have reserves to last for more than a century.

Effect of bauxite mining on local communities

Mining is one of the largest economic activities in Ghana, apart from farming. As mining sites are usually remote, companies have had to make huge investments in building infrastructure such as schools, roads, electricity, water supply and hospitals that have helped communities situated close to these locations.

However, due to the degradation of air, water and the environment as a result of mining activities, these communities have also been suffering. It has also been said that due to the lack of development in Ghana’s mining industry, there is rampant poverty. Government policies have failed to protect people and communities from the negative impact of mining, which has worsened the poverty levels of the country.

Chinese to mine bauxite in Ghana

A recent statement by the government expressing its intention to develop a new paradigm in terms of the country’s economic relationship with China to persuade that country to consider the kind of partnership with China, focused on investment and shared profitability, rather than aid.

The three critical things about this deal were a credible economic programme on which the team made a strong case with the one-district, one-factory policy, the Planting for Food and Jobs programme, the one-village, one-dam policy and other policies across various sectors, which China saw as credible too.

To buttress this point, the team explained that the bauxite reserves alone, if refined today using the world price as the base, would generate $460 billion.

The other view

Fine! There is no qualms about what the government believes is the best for the country but on the contrary, I wish to express my reservation and disagreement over its assertion in this regard.

In the first place, I don’t understand why the government is in haste to hand over our unexploited bauxite to the Chinese or any group of investors, be it local or foreign entrepreneurs, interested in mining our bauxite, because the quantum of our bauxite deposit is already known, since the exploratory work had already been done many years ago while the commercial quantities have also been established long ago.

For the purpose of competence and prudence in the trade/mining of materials, the difficulty and the most expensive part of the claim is prospecting and exploration.
Now from what has been stated above, it appears the bauxite in question has already gone through the exploratory and prospecting state.

It’s commercial viability is clearly established, which leaves us with the question of how we finance the last but one phase, which is mining.

Value for money

Now by the available statistics, the proven quantity is over 936 billion metric tonnes, which in actual terms is what Ghana has in terms of the quantity.

It follows, therefore, in the trade practice that you do not invite entities to come and partake in your booty. It is when you are not sure of the deposit and hence high risk of your inability to explore that you invite an investor to come and spend the requisite money to establish same. In this case, we have gone past that level (just like the ECG deal. It is instructive to note that it is after Ghana had established a monopoly in the sale of power through ECG that it finds it necessary to invite partakers which I think needs rethinking)

Now, by best practices and the trade practice by the proven quantities, we are ready to sell. We all know that these very landmark companies/corporations buy bauxite and are wholly in the business of buying bauxite. What we need to do as a country is engage them in a possible transaction of sales of bauxite for example if you secure referees, say 10 years, at an agreed rate per cubic metre less a percentage which shall be agreed compared to the alternative of the same commodity price (because your bauxite would be supplied into the future let’s say three years from payment)

Because the company is in the business of purchasing bauxite monthly, it will pitch its purchases for the period in question on the supply available and this is justifiable because the buyer gets it cheaper.

Now you get $50 billion, for instance, for the quantity in question for 10 years and in that you set up your mines and the mineral agreement to supply in due time.

I have taken my time to explain this because we do not use experts in this country but Ghana belongs to all of us and some of us think we should make our knowledge and ideas known to help protect some of the resources which have been sadly exploited.

Engaging an operator

Alternatively, if the implementation of this suggestion seems to be laden with problems and remain cosmetic, then the government should consider a much better option of engaging an operator to run the mines to maximise our profit. This operator should sign a performance contract which would guide and measure his output for continuous administration of the mines or not.

This option, to me, is the best because the resources of this country should be used judiciously to the benefit of the people not foreigners. The operator in this case will work on behalf of the state as the employer and would be expected under the contract to transfer the skills to the local people who would be under-studying him.

It is, therefore, my honest opinion that what should be done with our large bauxite deposit should end somewhere, and a more critical consideration be given to the options that have been enumerated above to give real meaning and value to the harnessing of our natural resources. This is the only way our natural resources can help us to transform our economy and make life better and comfortable for our people who are wallowing in abject poverty.