Ghana's mining output benefits from increased investment and improved regulation

Ghana is one of the world’s top-10 gold producers and the second largest in Africa. As such, the mining industry is a major economic driving force: it is the biggest single contributor to government revenues and a leading source of export earnings.

A wave of investments in recent years has boosted production and improved cost efficiency in gold and manganese mining. Meanwhile, the government has acted firmly to improve industry regulation, tackling long-term issues of illegal activity, known in Ghana as galamsey, and environmental damage, in addition to strengthening assaying capacity.


The mining sector’s leading representative organisation is the Ghana Chamber of Mines (GCM), which was founded in 1928 and operates as a voluntary private sector employers’ association representing companies engaged in the minerals and mining industry. In 2017 the realised mineral revenue of the chamber’s members grew by 13% to $5.9bn, up from $5.1bn in 2017, according to the GCM’s publication “The Performance of the Mining Industry in 2017”. Growth was attributable to broad-based output increases, and a rise in the amount of gold assayed by the government’s Precious Minerals Marketing Company (PMMC), which offset its fall in diamond exports.

The GCM’s members produced 2.8m oz of gold in 2017, up from 2.5m oz in 2016. The Ghana Manganese Company (GMC) increased its output by half to 3m tonnes, from 2m tonnes in 2016. The sector was boosted by robust international demand and healthy prices for gold and other minerals, as well as improvements on the supply side driven by recent capital investments by Ghana-based miners.

Government efforts to improve the reliability of electricity supply in the country have also benefitted the sector. “The availability of power and reliability of its supply has been a challenge,” Alfred Baku, executive vice-president and head of Gold Fields’ West Africa operations, told OBG. “Indeed, independent power producers (IPPs) have provided an important alternative for many stakeholders in the extractive industries. In the past year in particular, stability of power supply and reduced tariffs, partly attributable to the presence of the IPPs in the power sector, have significantly improved the operating environment.”

Export Performance

The volume of gold exports rose around 20% to 4.6m oz in 2017, up from 3.8m oz in 2016, according to Bank of Ghana (BoG) data quoted by the GCM. This came at the same time as a modest increase in the gold price, which traded at an accumulative average price of $1257 per oz in 2017, up from $1251 in 2016. Some Ghana-based largescale producers increased their output, supporting the growth of gold exports by licensed companies. Exports of manganese rose from 2m tonnes in 2016 to reach 3m tonnes in 2017, and bauxite exports went from 1.14m tonnes to 1.47m tonnes, up 50% and 29%, respectively. However, diamond exports through PMMC dropped 39% in 2017, to 87,068 carats.

Fiscal Fortress

The minerals and mining sector’s importance to the Ghanaian economy is underlined by the fact that it is the single biggest contributor to government revenues. Corporate income tax from the sector grew 39% from GHS696.9m ($150.6m) in 2016 to GHS969.6m ($209.5m) in 2017, while revenues from mineral royalties rose 28%, from GHS550.7m ($119m) to GHS702.4m ($151.8m), according to the GCM. Meanwhile, overall fiscal receipts from the sector rose 31%, up from GHS1.65bn ($356.6m) in 2016 to GHS2.16bn ($466.8m) in 2017, according to the Ghana Revenue Authority, accounting for some 16.3% of all direct domestic fiscal revenues in 2017.

Key Players

According to figures from the GCM’s report “The Performance of the Mining Industry in 2017”, the market leader by production is US-based Newmont Mining Corporation, which is listed on the New York Stock Exchange (NYSE). The company operates the Akyem mine, which produced 473,390 oz of gold in 2017, and the Ahafo mine, with output of 349,031 oz. Overall, Newmont produced 29% of GCM members’ output in 2017, down from 32% in 2016. Ghana’s largest mine is Tarkwa, owned by Gold Fields Ghana, a subsidiary of the South Africa-based Gold Fields, which is listed in Johannesburg with a secondary listing on the NYSE, and is the world’s seventh-largest gold company by production. Tarkwa accounted for approximately 20.2% of GCM members’ total gold output in 2017, some 566,388 oz. Gold Fields also operates the Damang mine through subsidiary Abosso Gold Fields. Damang accounted for around 5.1% of GCM output in 2017, with some 143,568 oz produced. Overall, this makes Gold Fields the second-biggest gold producer operating in Ghana.

Ranking third in production is Golden Star Resources, listed in Toronto. The company’s Wassa mine saw its output increase from 104,382 oz in 2016 to 137,234 oz in 2017, thanks to a 456% increase in production from its underground operations, to 61,347 oz, offsetting an 18% drop in gold produced from its open pit mine at the same site. Golden Star also raised production at its Prestea mine by 45%, from 89,673 oz in 2016 to 130,331 oz in 2017, thanks to rising activity in both underground and open-pit operations. Golden Star accounted for 10% of GCM members’ overall production, up from 8% in 2016.

Chirano Gold Mine, owned by Toronto-listed Kinross Gold Corporation, ranked fourth in production share. Its output of 246,027 oz in 2017, an increase of 16% on 211,440 oz in 2016, accounted for 9% of overall GCM members’ production, up slightly from 8%. This growth came despite an 11% drop in ore mined on the previous year, thanks to the higher grade of ore produced, as well as improved recovery rates.

Covering 8% of GCM members’ production, AngloGold Ashanti had a total output of 229,495 oz in 2017, with production increases at its Iduapriem mine offsetting a drop at its Obuasi operations, which were under care and maintenance for four years. In January 2019 AngloGold announced that they were to re-open Obuasi, which is set to see them become a leading producer in the country. At Iduapriem, meanwhile, the company boosted its ore mining output by 27%, thanks to greater mining fleet productivity.

Aisc Developments

The all-in sustaining cost (AISC) is the World Gold Council’s benchmark indicator that measures production cost plus all other costs related to sustaining current production and capital expenditure (capex). The AISC for GCM members fell by 7% to $1012 per oz in 2017, down from some $1089 in 2016. Nevertheless, this remains considerably higher than the global average of $878 per oz.

On the whole, Ghana’s mining companies were able to moderate costs in 2017. A recent wave of capital investments in fleet and new mine operations, as well as changes to inventory management, have fed through into companies’ cost bases and productivity levels. Gold Fields, for example, achieved a drop of 2% at Tarkwa, to $940 per oz, despite an 8% increase in capex. Savings on energy costs thanks to a new power-purchasing deal with Genser Energy, and the benefits of the company’s 2016 development agreement (DA) signed with the government, offset the costs of greater expenditure on the mining fleet. The DA provides fiscal stability and improves the environment for life-of-mine planning. These factors also helped Gold Fields’ Damang mine achieve a 10% drop in costs, while AISC fell 15% to $1027 per oz, despite a considerable increase in capex stemming from the company’s ongoing reinvestment programme. Meanwhile, Newmont achieved a 17% reduction in AISC, down to $961 per oz, at its Ahafo mine, by using lower stockpile inventory adjustments to cut amortisation and depreciation. But the opposite was true of the firm’s Akyem mine, where upwards adjustments to stockpile inventory and a problematic strip ratio (the volume of waste that must be handled to extract resources) saw AISC rise by 14%, to $664 per oz. However, this is still below the global average, indicating the competitiveness of the Akyem resource.

Also coming in below the global average AISC is Golden Star’s Prestea mine, at which costs dropped from $841 in 2016 to $784 per oz in 2017. This was despite an increase in capex driven by the development of both underground and open-pit resources. Meanwhile, the company’s Wassa mine saw AISC fall from $1027 to $996 per oz, after the completion of the underground mine at the site, and consequent increases in production and higher realised revenue. Perseus Mining managed one of the most drastic reductions in AISC in 2017, with its Edikan mine seeing a decline of 27.4% to $1097 per oz, from $1511 in 2016. Adamus Resources saw a significant 26% drop in AISC at its Nzema mine as capex declined with the completion of a pushback project to strip waste from a pit and improved access to high-grade ore.

Higher Costs

However, Asanko Gold Mines saw its AISC rise from $984 to $1007 per oz in 2017, as costs rose due to its pushback operations at its Nkran pit. Rollover of depreciation charges from 2016 also had a knock-on effect. Nonetheless, these investments are expected to improve Nkran’s performance over the medium term. “We need to attract a lot more investment into greenfield exploration in order to ensure a healthy pipeline of projects. So far production increases are generally from existing mines and expansions,” Sulemanu Koney, CEO of the GCM, told OBG.


Originally established in 1963 as the Ghana Diamond Marketing Board, the PMMC is one of the most important organisations in the sector. It is a stateowned enterprise which has traditionally focused on buying gold and diamonds from small-scale miners for export. Its other responsibilities include supporting the development of the Ghanaian jewellery industry, with a view to increasing in-country value.

Over the past few years, the role of the PMMC has changed from the purchase of minerals from smallscale miners to the assaying of minerals prior to export. In 2016 the organisation was appointed as the government’s assayer, and since February 2018 has assayed large-scale mining companies’ production as well as that of small-scale producers. This entails the PMMC grading, valuing, and testing gold for its contents and quality prior to export, strengthening the government’s oversight of the sector, and boosting its revenue-collecting capabilities at a crucial time. All domestic gold and diamond traders were also required to renew their licences by January 2018 through the PMMC. The organisation is working with security and intelligence authorities to tackle illegal operations in the downstream minerals market.

The PMMC’s change of remit is expected to have a net positive impact on the sector and improving the assaying regime, enhancing confidence in Ghana’s mineral exports, as well as ensuring that legitimate producers are not undercut by illegal operators. “The increased role of the PMMC in the assaying process will help standardise assaying methodology and dispel the notion that large-scale mining firms under-declare their gold exports,” Baku told OBG.

New Partnerships

The PMMC’s expanded role has led to the company seeking to forge new partnerships with international counterparts to bolster its capacity and technology. In September 2018 it signed a memorandum of understanding (MoU) with Baird & Company, the UK’s largest gold refinery, with a view to establishing a gold assay centre and laboratory in Accra. The chairman of the PMMC board of directors, Kiston Akomeng Kissi, told local press outlets that Baird would contribute to further strengthening the company’s assaying capabilities, supporting the government’s goal of more effective revenue collection.

The MoU foresees the establishment of an assaying company, with PMMC and Baird each having a 50% ownership stake, operating an assaying centre at Kotoka International Airport in Accra. It also lays the groundwork for knowledge and technology transfer to the Ghanaian company over the medium to long term, which will strengthen domestic capacity in the field of assaying. The Accra assaying centre will generate automatic tax invoices for exporters following the assessment of the minerals it handles.

In October 2018 local press reported that the PMMC had formed a partnership with India’s Rosy Royal Minerals to establish its first national gold refinery in an investment totalling $20m. Sector players and the government have long expressed a desire to establish a refinery to boost the value of the gold that the country produces and exports. At present, the country largely exports raw gold, and it is thought that value could be boosted considerably by refining. The PMMC is to have a 20% equity stake in the refinery, which is slated to commence operations in July 2019. However, the operating company will have management autonomy.


In December 2018 the government lifted its ban on small-scale mining operations after nearly two years. The ban was originally imposed due to the proliferation of illegal mining activity over the past decade, which was perceived to be causing serious environmental damage, tensions with local communities, serious health and safety issues, and lost revenues for the government. An extensive process of vetting and re-vetting miners and concessions is under way, with hundreds of licences issued under a new framework for small-scale mining. While the ban was somewhat controversial, in the long term many in the industry see it as an opportunity to reboot and legitimise the small-scale mining segment.


The substantial increase in manganese production in 2017 was largely attributable to rising global demand. The sector was able to ramp up output following substantial capital investments by the Ghana Manganese Company (GMC), after its Australia-based parent company, Consolidated Minerals (Consmin), was acquired by a subsidiary of China’s Ningxia Tianyuan Manganese Industry (TMI) in a deal finalised in May 2017. Consmin owns a 90% stake in GMC, with the remainder owned by the government. The company expects to increase its output to 6m tonnes in 2018.

GMC’s Nsuta mine has considerable potential. While mining operations on the site date to 1916, less than 3% of the 175-sq-km concession has been mined to date. The concession has 45m tonnes of proven reserves, and the ores have one of the highest manganese-to-iron ratios in the world, as well as being low in impurities, which means that they are well-suited for alloy and manganese metal production.

The qualities of the Nsuta reserves’ carbonate ore was one of the most important factors behind TMI’s acquisition of Cosmin. Its immediate expansion potential is set to meet the Chinese company’s growing feedstock needs, as one of the world’s leading producers of electrolytic manganese metal.


Ghana also has some of the world’s largest bauxite reserves, with 960m tonnes worth an estimated $460bn. Historically, the sector has been centred on one company, the Ghana Bauxite Company, and its mine in Awaso. In 2017 Ghana saw revenues from bauxite exports rise to $50.9m, up from $38.7m in 2016. The segment has become a focus of attention in recent years thanks to a MoU signed between China and the government in May 2018 that will see $10bn invested in bauxite development in Ghana, including mining, a refinery and supporting infrastructure including a railway. More recent estimates suggest that the partnership could be worth $15bn, with China providing funding that the government would allocate to everything from road improvements to police vehicles. However, some elements of the project have proved controversial, among them plans to develop mining in environmentally-sensitive forest areas, and the risk that the Ghanaian government will have to cover the upfront cost of medium-term investments, as well as cover any shortfall if bauxite revenues are lower than forecast.

Tax Tightening

The 2019 budget proposes significant changes to the fiscal regime governing the mining industry, with the aim of closing loopholes and cutting perceived leakages of tax revenues and royalties. The budget takes into account the fact that provisional mineral royalties fell 6% short of target in the third quarter of 2018 – losing the exchequer an estimated GHS31m ($6.7m), according to PwC in its “2019 Budget Highlights” report. This shortfall has exacerbated the perception that Ghana has not retained enough of the value of its mineral resources in the past. The government’s proposals include greater scrutiny of minerals produced; curbing base erosion, which leads to systemic under-calculation of royalties and profits; tightening the foreign exchange repatriation regime managed by the BoG; and rebooting the government’s Inter-Agency Technical Committee on Mining.

The budget also proposes shifting the 3% withholding tax levied on small-scale operators to the point of export. This is intended to simplify its collection and strengthen the government’s calculations of mineral valuation and the income derived by such miners. However, it is not yet clear if and how the tax will apply to those selling unprocessed minerals within Ghana.


Most strikingly, the budget proposes that the government take a more significant stake in the mining industry through capitalisation of the tax exemptions that are granted to mining companies. Specifically, this would entail the government taking or increasing equity stakes in the relevant operating companies. This move would go hand-in-hand with the establishment of the Ghana Minerals Investment Income Fund to manage the government’s mineral royalties, equity in mining companies and other revenues from the sector, and leverage them to support the country’s development needs.

The foundations for the fund have already been laid by the Ghana Minerals Investment Income Fund Bill, passed in September 2018. The organisation could potentially operate like a sovereign wealth fund for Ghana, but with a stronger focus on domestic development than building a global investment portfolio. The 2019 budget proposes that the fund could raise extra capital through an initial public offering (IPO) on the Ghana Stock Exchange and the London Stock Exchange. The government anticipates that it will raise up to $750m through the offering, which would potentially provide a boost to the mining sector through attracting international financial investors.

Nonetheless, as PwC points out in its budget report, several issues need to be addressed by the government if it is to implement the capitalisation scheme. These include how the value of the equity stake that the government will take in companies will be calculated as an equivalent of tax exempted. Investors will also be keen to ascertain whether the government’s equity stakes are limited, in order to curb state takeovers of private companies. They will also hope for clarity on whether the government’s equity stakes will lead to the expectation of involvement in management decision-making.


After a period of consolidation and reform, the Ghanaian mining industry is in a strong position for long-term growth. A firmer regulatory framework, the increasing formalisation of small-scale mining, and more streamlined assaying should all benefit legitimate mining companies, as well as the government exchequer. The scope for expansion of greenfield investment and downstream activities is considerable. While some feel that the former has been held back by the fiscal environment, the latter should finally start to accelerate with the construction of PMMC’s new gold refinery.

Ghana boasts political stability and a strong institutional framework, and these factors are expected to continue to underpin investment in the mining sector in years to come. However, international players will be keen for some clarification with regard to plans to increase state equity stakes in key operating companies.

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Ghana 2019

Mining chapter from The Report: Ghana 2019

Cover of The Report: Ghana 2019

The Report

This article is from the Mining chapter of The Report: Ghana 2019. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart