Even as government claims it is preparing to lift the ban on small scale mining of gold, which has been in force since March 2017, Ghana’s economy is counting the cost of the ban in terms of forgone foreign exchange revenues.
The ban was put in place for government to find ways of curbing the huge environmental damage caused by illegal small-scale mining, popularly known as galamsey, but it has also covered the 1,000 or so licensed, legal small-scale mining enterprises as well.
Between the licensed, legal small-scale miners and their unlicensed, illegal counterparts, they account for an estimated 35% of the country’s total gold production, which in turn accounts for 95% of its total mining export revenues.
According to data from the Bank of Ghana, revenues from gold exports during the first four months of 2018 – January to April – amounted to US$1,906.2 million, down 13.3% from the US$2,199.1 million earned during the corresponding period of 2017.
This fall in revenue occurred despite the fact that gold prices have been recovering from the global market price crash of 2013, which saw prices fall from over US$1,600 an ounce to barely US$1,000.
Between April 2017, and April 2018, gold prices rose from US$1,270.0 to US$1,334.9 per ounce, a rise of 5.1%.
While production figures for 2018 are not immediately available, the Ghana Chamber of Mines, whose members comprise the large-scale producers, who are not affected by the ban on small scale mining, says that production by its members has not fallen this year, compared with last year.
Indeed, the Chamber’s chief executive, Dr Sulemanu Koney, confirms that the fall in export revenues is primarily the direct result of the ban on licensed small-scale miners, whose export revenue figures have been captured in official data, although it is widely believed that their export volume and value figures have usually been understated to lower their tax obligations and the repatriation obligations deriving from their foreign exchange earnings.
Ghana’s continued merchandise trade surplus into the first quarter of 2018 – the sixth successive quarter of trade surpluses – was only made possible by a near doubling of oil export earnings during the first four months of this year, which amounted to US$1,465.6 million, compared with the US$845.3 million earned during the corresponding period of 2017, on the back of higher global market prices and higher production.
The realized price of Ghana’s crude oil exports was US$71.9 per barrel, by April this year, up 32% over US$54.5 per barrel a year earlier.
Government claims it is preparing to lift the ban on small scale mining by licensed, legal enterprises soon, having prepared measures to prevent the illegal version of their business from restarting.