Multiple factors bode well for Ghana's gold mining industry as the government prepares to open a new refinery

In 2018 Ghana overtook South Africa to become the top gold producer in Africa. According to the Ghana Chamber of Mines, total production increased by 11.9% in 2018, from 4.3m oz in 2017 to some 4.8m oz, with gains in output expected to continue beyond 2019. Global credit ratings agency Fitch also ranked Ghana’s mining sector first in Africa – ahead of both Botswana and South Africa – on its Risk Reward Index, which compares industry rewards and risk against others in the region. Fitch reported that Ghana’s high ranking was due to its lower vulnerability to commodity price swings, stronger mining regulations, and competitive labour costs and electricity prices.

Production Output

According to Fitch, gold mine production volumes were forecast to grow by 6% to 4.85m oz in 2019. Contributing to the projected increase in output was the reopening of AngloGold’s Obuasi Gold Mine in the third quarter of 2019. The redeveloped mine, which has been undergoing maintenance since 2016, will see its lifecycle extended beyond 20 years, with a projected annual production rate of 350,000-450,000 oz within the first 10 years. Adding to the optimism around large scale-mining, in January 2019 Asanko Gold Mines, in a joint venture with Gold Fields Ghana, began production at the Esaase deposit, which forms part of the Asanko Gold Mine located in the Asankrangwa Belt in the Kumasi Basin. The operation is expected to produce 500,000 oz of gold per year.

US-based Newmont Mining is also expected to ramp up production at the Ahafo Mine located in the Sefwi Volcanic Belt, as part of the Subika underground project, which came on-line in November 2018. The Subika project was estimated to increase production at Ahafo by between 150,000 and 200,000 oz per year within the first five years of operation, beginning in 2019.

Small-Scale Operations

Despite a ban on smallscale mining activities imposed in 2017, output at such operations was up 34.4% in 2018, while large-scale mining production remained relatively stable at 2.8m oz. The ban was aimed at achieving sustainable mining activities and halting environmental degradation. The relative stagnation of large-scale mining was representative of mixed performance in the sector, which saw some companies increase production while output from others declined. Although the ban did not in itself curtail illegal mining activity, several steps taken by the Inter-Ministerial Committee on Illegal Mining worked to expel illegal foreign miners and streamline the licensing of small-scale mining activities. Some 3500 small-scale and artisanal miners were accredited and registered while receiving training on technologically advanced mining techniques to improve production. Restrictions were lifted in December 2018, leading to expectations of higher output resulting from the reforms and the resumption of small-scale operations. Stable macroeconomic conditions are expected to bolster these activities as local miners are offered new opportunities and access to loans and finance (see Banking chapter).

Refining Capacity

Ghana currently has two private refineries in operation: the Gold Coast Refinery and the Sahara Royal Gold Refinery. In October 2019 the government reaffirmed its commitment to establish a state-owned gold refinery through the Precious Minerals Marketing Company (PMMC). A significant portion of unrefined gold is exported for processing, primarily to Switzerland, South Africa and the UAE. In line with broader industrialisation and local value-addition policies, the PMMC, which serves as the national assayer, partnered with Ghana Royal Gold in 2018 to construct a state-owned refinery to stimulate local industry. Construction on the new refinery commenced in 2018 at an estimated cost of approximately $20m. “Upon completion in 2020, the refinery is expected to process at least 30% of Ghana’s ore for both export and supply to the local jewellery manufacturing industry,” Venance Day, deputy managing director of the PMMC, told OBG. “The move is expected to boost fiscal revenue and create employment opportunities in manufacturing.”