The impact of mining in Ghana
The mining sector remains a major backbone of Ghana’s economy as the leading foreign exchange earner for the country. It is not only the largest tax contributor to the exchequer, it also accounts for about 40 per cent of mechanised exports while attracting foreign investments running into hundreds of millions of US dollars annually.
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Data from the Ghana Revenue Authority (GRA), showed that in 2013, outflows from the mining sector into the country’s coffers was approximately GH¢1.1 billion, representing 18.7 per cent of total domestic revenue mobilised by the GRA.
Revenue from mining includes compensation, royalties, salaries and wages, import and export duties and tax on profits. In 2013 alone, compensation, wages and salaries to personnel in the mining industry amounted to US$670 million.
The total workforce in the industry in that year stood at 17,103, made up of 16,819 Ghanaians and 284 expatriates. These figures did take into account the operations of uncontrolled and illegal mining, popularly known as ‘galamsey’.
Apart from those directly employed in the industry, there are tens of thousands, approximately 50,000 people who indirectly depend on the mines for their income.
Notwithstanding these impressive statistics, many Ghanaians do not see mining in favourable terms. Some people believe that the sector operates as an ‘enclave’ with few positive ‘spillover’ effects, meaning that few within Ghana benefit from gold mining in particular while most of the profits go offshore.
This perception has not been helped by illegal mining with its related widespread destruction of farms and farmlands, water bodies, flora and fauna and the unregulated use of dangerous chemicals such as cyanide.
Attempting to go in defence of gold mining in the country, therefore, has to be done with caution in order not to step on already sore toes. The biggest problem with mining is its environmental challenges and this could be greatly minimised or totally controlled if well regulated and the rules rigidly enforced.
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When that is done, gold mining could be a profitable enterprise with enormous benefits to the nation, businesses and the immediate communities where they are located.
For the purposes of this article, the focus will be on the Ahafo Mine of Newmont Gold Ghana Limited (NGGL) located in the Asutifi District in the Brong Ahafo Region.
Newmont Ahafo Mine
Newmont Ghana Gold Limited (NGGL) started mining operations at its Ahafo Mine in 2006. In 2011, the Ahafo Mine produced 566,000 ounces of gold, the equivalent of Ghana’s total production. NGGL’s revenue was US$869 million or 18.8 per cent of Ghana’s total gold revenue.
A second mine being operated by NGGL’s sister company, Newmont Golden Ridge Limited, started operations in Akyem in 2013.
A socio-economic impact assessment study indicated that at the national level, the Ahafo Mine supports US$360 million value added in terms of economic activity (0.95 per cent of Ghana’s GDP) of which US$230 million is directly attributable to NGGL (0.60 per cent of GDP).
It also contributes directly US$160 million to government tax income (2.56 per cent of national tax revenues), US$39 million to household incomes and US$31 million as carried interest income to the government.
In addition to revenue generation, NGGL supports 41,000 jobs (0.39 per cent of the total labour force in Ghana), of which 1,921 jobs are directly attributable to NGGL (0.02 per cent of Ghana’s total labour force).
The Newmont Ahafo Development Foundation (NADeF)
This is a community development foundation set up and supported by NGGL with one per cent of NGGL’s profit after taxes and US$1 for every ounce of gold sold. Since NADeF’s establishment in 2008, NGGL has contributed almost US$13 million to it, of which US$3.51 million was for 2011 alone.
According to its charter, NADeF puts 10 per cent of NGGL’s contribution into a capital endowment and the remainder is spent on human resources development, infrastructure, social amenities, economic empowerment, natural resource management and cultural heritage and sports activities, subject to the approval of a board of trustees.
So far, the foundation has spent about US$9 million on scholarships and projects such as the building of schools, community houses, boreholes and the delivery of tools and equipment.
Conclusion
The key findings of the socio-economic impact assessment study indicate that NGGL is a major contributor to Ghana’s economy, generating nearly 10 per cent of the nation’s total exports; 4.5 per cent of its total foreign direct investment and 1.3 per cent of GDP.
NGGL directly and indirectly supported some 48,000 jobs in Ghana and NGGL played a significant developmental role in the communities around the Ahafo Mine and in 2009 alone provided 99 regional companies with nearly US$6 million in contracts, supporting more than 400 jobs, not including direct employment.
Additionally, NGGL supports 0.95 per cent of Ghana’s GDP, generates 2.84 per cent of the country’s total tax revenues and creates employment for 0.39 per cent of the Ghanaian workforce.
NGGL has made and continues to make a positive impact on economic activities in the Asutifi District of the Brong Ahafo Region where its mine is located. It generates about 8 per cent of value added and employing about 10 per cent of the workforce.
NGGL’s presence and need for skilled labour has attracted people from outside the area to the Brong Ahafo Region and the Asutifi District leading to higher prices and services in the region. Generally speaking, NGGL’s economic impact has translated into higher disposal income for especially its employees who spend almost twice as much as the people outside NGGL’s catchment area.
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Social amenities and services that were non-existent have been provided and continue to be provided through the Newmont Ahafo Development Foundation even though its sustenance and future operations will greatly be dependent on the operations and profit margins of NGGL.
By all indications, NGGL has proved to be an effective partner in the economic development of the country at both the national, regional and district levels and will continue to be so as long as mining operations flourish and world market price for the commodity remains competitive. — GB