Ghana's Gold Production Drops

Ghana is ceding her leading status in many areas, including sports to sister African countries. Apart from losing her position as the leading producer of cocoa to neighbouring Ivory Coast and Malaysia, Ghana is again ceding ground in gold production to countries like Tanzania, Guinea and Mali.

The country formerly called the Gold Coast, because of its abundant gold production in the past is currently experiencing a sharp decline in gold production.

A Ghana Chamber of Mines statistics released last week shows that Ghana recorded a decline of 226,000 ounces and earnings of $41.1 million between 1999 and 2000.

The country earned a total of $648.3 million from 2.315 ounces of gold produced last year compared to the $689.4 million from 2.541 million ounces in 1999.

Ashanti Goldfields Group, which is the flagship of gold mining in the country made the highest contribution of $320,100 million from 1.144 million ounces of gold, compared to the 1.213 million ounces valued at $340,203 million in 1999.

Abosso Goldfields Company made a gain, producing 317,696 ounces of gold valued at $90.7 million against the 1999 figure of $88,000 million from 303,693 ounces of gold produced.

Goldfields Ghana Limited also posted an increase of 30,118 ounces to reach 362,365 ounces valued at 98,563 dollars.

Barnex Prestea, Limited and Dunkwa Continental Goldfields made no contributions since the two folded up a couple of years ago while Midras Mining Limited and Tebrebie Goldfields Limited, which produced 1,066 and 275,634 ounces of gold respectively did not have figures for last year for the same reason.

Bogoso Gold Limited, Bonte Gold Mines Limited, Small-Scale (PMMC), Resolute Amansie Limited, Prestea Sankofa Gold and Satellite Goldfields Limited produced a total of $138.916 million from a total production of 490,583 ounces.

The report said diamonds recorded 686,551 carats of produced by the Precious Minerals Marketing Company at $11.5 million. Statistics are not available for Ghana Consolidated Diamonds Limited.

Bauxite production appreciated last year, earning Ghana $12.7 million from 503,825 tonnes collected against the 355,260 tonnes that brought in $7.5 million in 1999.

Manganese production by Ghana Manganese Company also went up to 895,669 from 638,937 produced in 1999 which fetched Ghana $18.5 million in 1999 against $20.5 million last year.

The decline in mineral production, especially gold has been blamed on the sharp decline in the price of the commodity, which contributes about 95% of Ghana's mineral export revenue. James Kwamena Anaman, President of the Chamber of Mines who disclosed these to the press said the price of the commodity still hovers around $260 per ounce with frequent dips to $255 per ounce. "The consequences of this for global mining industry have been grave. Many mining companies have become insolvent because of the continued low price," Anaman told the press.

He said the decline in gold prices has caused the laying off of 3,000 of its 10,000 employees of Ashanti last year when it shut down its surface operations. The shut down has been blamed on the increase in he production cost per ounce of gold. Last year, Ashanti's production cost rose to $208 per ounce. Additional costs made up of royalty payment ($9 per ounce), capital expenditure($51) and financing cost ($30)brought the final cost to $298. Put alongside the prevailing price of $260 per ounce of gold on the world market, there is every reason why the mining companies are feeling the heat.

Anaman disclosed that as a result of the difficult business environment many mining companies have been operating at a losses. As at last year, a big gold company like Teberebie Goldfields has sold out and left the country, while another, Satellite Goldfields is in the process winding up its operations.

The winding up of mining companies in part has to do with Ghana's lack of competitiveness. The president of the Chamber of Mines lamented that while Ghana was fast losing its competitiveness in the subregion, other countries, such Guinea, Mali and Tanzania have recently been beneficiaries of a more investor-friendly mining environment. In fact Guinea and Mali are said to have borrowed Ghana's mining laws, revised them and are using them to their advantage. According to Anaman, an index of a country's ability to woo investors is determined by the number of prospecting licences issued. Issuance of licences however, seems to be on the decline in Ghana. Records show that there has been a drop from 62 licences in 1997 to four in 2000.