Minerals output jumps, revenue falls

Minerals output rose in the first half of 2014 but revenues declined due to lower prices, Chamber of Mines data have shown.

Ghana’s export revenues from gold, bauxite, diamond and manganese in the period was US$2.143 billion, down from US$2.477 billion in the first half of 2013.

The decline was largely on the back of the falling gold price despite an impressive performance from diamond and bauxite, acting CEO of the Chamber of Mines Sulemanu Koney disclosed.

Gold, which has in recent times seen a drastic decline in its price, saw a fall in revenue of 14.1 percent. The metal recorded US$2.062 billion for the half-year, as against US$2.399 billion for the first half of 2013.

Gold output was however up by 1.5 percent, rising from 1.52 million ounces in the first six months of 2013 to 1.54 million ounces between January-June 2014.

Bauxite revenue increased significantly, by 78 percent, on account of the substantial rise in shipments of the ore which went up by 108.4 percent. Shipments rose from 292,778 tonnes to 610,074 tonnes in the period.

Diamond purchases also surged by 78 percent from 4,137,641 carats in the first half of 2013, to 7,363,145 carats in 2014.

Manganese shipments saw an increase by 7.7 percent, but there was a slump in revenue by 14.3 percent -- from US$62,442,008 in the first half of 2013 to US$53,499,903 for the same period in 2014.

“The mining industry’s performance in the area of production six months through the year has been mixed, but the significant increase in output confirms mining’s continuous position as key for the country’s economy,” Mr. Koney said.

Bullion has dropped 25 percent since the beginning of 2013, including a 5.60 percent drop last week to US$$1,287.70 an ounce.

Mr. Daniel Owiredu, a former President of the chamber, opined that the imminent temporary shutdown of AngloGold Ashanti’s Obuasi Mine for rehabilitation may significantly blight the fortunes of the minerals industry in 2014 -- while output at Golden Star’s Wassa Mine is projected to decline to between 130,000 and 140,000 ounces in 2014 due to ongoing rationalisation of production.

The effect of the falling gold price has caused the country to slip to ninth position in leading gold producers in 2013, compared to eighth in 2012.

Mr. Owiredu said the downturn in gold revenue drove a percentage point reduction in the share of gold in total mineral revenue for 2013, from 97.5 percent to 96.3 percent.

Alfred Baku, Executive Vice President of Gold Fields’ West Africa Operations, has said mining investments are under threat as companies are cancelling new projects and closing mines due to pressure from price-dips, cost increases and higher taxes.

“Equity investors have become frustrated as miners have spent their money with little to show for it. Returns just do not warrant the risk. In reality, margins and returns from mining are in decline; operating cash flows are not sufficient to cover investments,” he said.