Mining is probably Ghana's most established industry. In the fifteenth and sixteenth centuries the as yet unformed country was the world's biggest producer of gold, constituting over one third of global output. The West African nation is still a major producer, and is currently ranked tenth largest in the world, and second in Africa behind South Africa.
However, the mining industry, though a significant revenue-generator, is the subject of intense scrutiny and challenge. Illegal gold mining, known by the term 'galamsey' has been grabbing the headlines as much as community based allegations of negligence by mining companies and claims of government ineptitude regarding the protection of local community interests.
On 14th October it was reported that that a Chinese miner in the Ashanti region was killed, and more than 90 detained, at the hands of Ghana's security forces. The details of the incident are still sketchy, but some reports suggest that it was a 16 year old illegal miner who was killed when the security forces shot at the "galamsey" miners in the Manso area. It follows a recent crackdown on illegal mining activity by the authorities following opposition from disgruntled locals as well as Ghanaian illegal miners, who have been entering into something of a turf war with the Chinese.
CEO of Ghana's Chamber of Mines, Dr. Toni Aubynn, formerly with Tullow Oil, has been an open critic of illegal Chinese mining in Ghana. At a press conference in Kumasi back in July, he told journalists that Ghana ought to be tougher on galamsey.
He called on politicians to take a unified approach on the issue because those engaged in illegal mining do not pay taxes to the state. He also underscored that it is not just Ghanaians and the Chinese who are involved, but also Spanish nationals. The practice of mechanised mining used by the illegal miners is also having a devastating impact on the environment.
The same sentiment was echoed at the 12th Annual National Mining Forum held in New Abirem in the Eastern Region of Ghana in October. The forum, hosted by the National Coalition on Mining (NCOM), brought together multiple stakeholders including traditional leaders, town and country planning representatives, non-governmental organisations and national and local government.
Some participants took to the podium to denounce the practices of galamsey, and in particular, the Chinese illegal miners who operate in significant numbers in areas such as Tarkwa and along the Ankobra River in the Western region. The perception of Chinese illegal miners was made worse by allegations of sexual abuse against local women, also raised at the forum.
Mining Activity in New Abirem
New Abirem, Akyem, is the newest of Newmont's mine-sites. The company commenced operations there in 2010 and since then, has faced some stiff opposition from the local community and pressure groups, particularly because the project will see 12 percent of the Ajenjua Bepo Forest Reserve used for mining activity. The company argues that this level of opposition is misplaced because the mine site has been classified by the Forestry Commission as a largely degraded.
Even so, the 2.6km by 0.8km mine site will threaten the reserve's wildlife and plant species. In addition, the displacement of communities residing in and around the area was cited as a significant issue at the forum. The overwhelming sentiment from civil society was that there was a real lack of accountability on the part of the company - reinforced by its absence from the meeting- and a failure by government to prioritise community needs.
As is stipulated in the Constitution of Ghana, the nation's mineral wealth is held in trust by the state for the nation. This point was underscored by Dr. Abdoulai Daramani, an eminent figure within NCOM who was formerly with the Third World Network but who currently consults on mining and environmental issues. He encouraged the community groups to coordinate affirmatively and articulate their demands coherently. As it stands, out of the three stakeholders in the mining sector - the government, the mining companies and civil society - it is "civil society which is the weakest link".
He laboured the point that a unified approach is what will make the bargaining power of the communities stronger and that when it comes to compensation "there's no fixed price [for it]. By the law of Ghana, your price for compensation depends on your ability to negotiate".
Indeed, a persistent complaint was that adequate compensation is rarely provided. An earlier conversation with the Ghana Wildlife Society and Songhai Advisory revealed the same sentiment, with key figures within the organisation underscoring the need for a more quantitative approach when it comes to compensation arrangements. If land on which a cash crop is cultivated is taken, adequate compensation would mean looking at the "lifespan of the crop per yield" rather than simply the value of the land at that particular time.
Dr Daramani implored the stakeholders not to be seduced by the seemingly large lump sum offered as compensation, but rather to calculate what the "loss of earnings" in the future would be, since the lifespan of the cocoa bean is on average 40 years.
Government For the People, By the People?
Emphasis was also placed on the social contract between the government and its citizens - it was felt that the government should do more to advance the interests of the community. The Minerals Commission acknowledged that "Many African countries, like Ghana, rely on revenues from extractive industries in the form of taxes, royalties, fees and others to fund their economic growth and social activities. Lack of accountability and transparency in the management of these revenues sometimes lead to poor governance".
Specifically in the case of Ghana, the representative encouraged Ghanaians to "have patience" because the government is in the midst of reviewing the incentives it gives to mining companies but that this all takes time". Some changes have already been introduced: http://tiny.cc/s5h7lw.
The Commission went on to point out that under current plans for new legislation governing the mining sector, the Mineral Development Fund Bill will ensure that:
- 10% goes to the Office of the Administrator of Stool Lands
- 4% to the Mining Community Development Scheme
- 2% to Ministry responsible for mines and administrative expenses of the MDF
- 1.6% to the Minerals Commission
- 1.4% to the Geological survey dept
- 1% for research, training
However, no indication was given as to when the bill is likely to be passed and with just under two months to go until general elections, there is speculation that its passage could be delayed until next year. But whoever comes to power in January 2013 will be under pressure to take bold steps to ensure that the people at the grassroots benefit, otherwise, as one delegate warned, Ghana could have a situation not too dissimilar to South Africa on its hands.
Kissy Agyeman-Togobo is Partner at Songhai Advisory LLP.