IEA calls for better terms in Akyem gold mine sale

The Institute for Energy Affairs (IEA) has called on the government to negotiate better terms in the sale of US-based Newmont Company of its Akyem Gold Mine Project in Ghana to China’s Zijin Mining Group, than the planned $1 billion agreed upon. 

In a statement, the IEA, which described the deal as flawed, argued that selling the mine to Zijin for $1 billion would shortchange the country, as the wealth generated would primarily benefit Newmont.

“The IEA sees the deal to be flawed in several respects, inimical to Ghana’s interest and unacceptable,” the statement added.

It further said that allowing a foreign entity to take over the mine contradicts statements made by the President in his State of the Nation Address earlier this year, where he said the government would give priority to Ghanaian investors.

The IEA, therefore, questioned why the government’s stance had shifted, particularly given that local entities reportedly bid for the mine but were outdone by Zijin.

The Akyem Gold Mine, it said, could generate about $1.05 billion annually if owned by Ghanaian investors since it has an annual production average of 11.4 tonnes (approximately 402,123 ounces) of gold.

Reforms

The IEA is, therefore, advocating a paradigm shift in Ghana's mining contracts, urging the government to maintain dominant ownership of its mineral resources.

It pointed out that the country's historical reliance on foreign companies had not yielded equitable benefits, hence the need to negotiate better terms for resource exploitation.

The statement further said that even Canada, where Zijin was also seeking to invest in the domestic critical minerals sector, and planning initially to buy a 15 per cent stake in Canadian copper company, Solaris Resources, it had decided to limit Zijin’s stake in the interest of Canadian national security.

To enhance governance and reduce corruption in the management of natural resources, the IEA proposed two key amendments.

First, it said there was the need to amend Article 257(6) of the 1992 Constitution to vest Ghana's natural resources in the state, requiring all contracts to undergo parliamentary ratification.

The IEA also called for the introduction of a provision that prohibits governments from signing contracts exceeding a specified monetary value six months before the end of their term, preventing last-minute agreements that may favour personal interests. 

Lease

The lease for the Akyem Gold Mine was signed between the Ghanaian government and Newmont on January 19, 2010, with a validity of 15 years, which is set to expire on January 19, 2025.

The IEA said per the lease terms, any transfer of the project must be mutually agreed upon by the government and Newmont.

It said as of now, the IEA was not aware of any such agreement being reached for the mine's transfer to Zijin, nor had the extension clause been invoked.