Improved performance by large scale and small scale operators drove Ghana’s gold production upturn in 2022

Ghana is well known for its history in gold mining in the African continent. The country is currently Africa’s largest gold producer of the precious metal following an improved performance in 2022 after a significant production downswing in 2021. Total gold produced in Ghana increased by 32% year-on-year to 3.72 million ounces from 2.82 million ounces recorded in 2021. The increase in gold production was driven by improved performance by both large scale and small scale operators with the latter subsector contributing principally to the upturn.

 

Large scale mining sector performance

Figures from the Ministry of Lands and Natural Resources indicate that the large scale sector produced a historic gold output of 3,011,548 ounces in 2022 which represents a year-on-year upturn of 11.1%. This put the subsector’s share of national gold production to approximately 81%, a drop from 96% in 2021.

The Ghana Chamber of Mines attributes the growth in gold output in 2022 to a combination of fresh output and expansion of production at existing large scale mines. Companies such as the Asante Gold-operated Mensin Gold Bibiani Ltd, and Golden Team Mining achieved commercial production in 2022. Sankofa Gold Mine in Prestea also resumed operations in 2022 coupled with full year operations of Earl International Gold Limited and the Akrokeri Mine of Goldstone Resources Ltd which recorded their first gold pour in late 2021. The significant upturn in production by existing large scale companies such as Newmont’s Ahafo and Akyem Mines, Gold Fields’ Tarkwa Mine, AngloGold Ashanti’s Iduapriem and Obuasi Mines, and the Edikan Mine of Perseus also contributed to the rise in the sub-sector’s gold output.

In 2021, the sector recorded a production downturn of 4.2%, which according to the Ghana Chamber of Mines was occasioned by broad decline in the output by more than 10% of some mines such as Asanko Gold Mines (15.8%), AngloGold Ashanti’s Obuasi (15.08%) and Iduapriem Mines (26.54%), Adamus Resources Ltd (13.2%) due to operational related challenges.

          Gold Production by Ghana Chamber of Mines Members (Chart Source: Ghana Chamber of Mines)

Small scale mining sector performance

Likewise, the small scale mining sector also improved performance in 2022 with an increase in gold output from 110,274 ounces in 2021 to 712,405 ounces in 2022, an upturn of over 500% which marked a significant turnaround by the subsector after a major drop in production from 1,264,029 ounces in 2020 to 110,274 ounces in 2021. The performance of the small scale sector in 2022 put the subsector’s share of national production to 19%.

The significant upsurge in gold output by the small scale sector—although below pre-pandemic and pandemic levels—has been attributed to the reduction in the withholding tax rate on export of unprocessed gold by small-scale miners from 3% to 1.5% and the introduction of the community mining scheme.  The community mining scheme is an initiative where a mining area is formally licensed by the Minerals Commission for local indigenes who are 18 years and above to engage in regulated and responsible mining. The scheme is aimed at curbing illegal mining and its related environmental destruction, creating jobs for the youth, reducing poverty, improving livelihoods and local economic development in mining communities and to increase the country’s gold production and revenue. So far, over 20 community mining schemes have been launched by the government with each mine receiving a mercury-free mineral processing equipment supplied by Commodity Monitor Limited.

It is important to note that due to the difficulty in collecting actual data on gold production by the small scale sector considering the fact that a significant number of small scale operations are informal, figures on gold purchases and export by the Licensed Gold Export Companies (LGEC’s) through the Precious Minerals and Marketing Company are used as proxy for the small scale sector’s national production. As a result, actual gold production by the subsector may be higher than reported.

Impact of gold production

The increase in gold production has significant benefits for Ghana’s economy. Gold is the country’s main export commodity, accounting for about 38% of its total export earnings, equivalent to US$6.6 billion in 2022. The sector also provides direct and indirect employment for over 3 million people and contributes to social development through taxes, royalties and corporate social responsibilities. Moreover, Ghana is currently relying on its gold production levels to hedge against inflation and currency depreciation, through the Gold for oil policy and the domestic gold purchase programme due to current economic volatilities in the country.

Despite the upside, the gold sector is fraught with several problems. Key amongst them are the environmental destruction problems—land, air and water pollution—creating dire consequences on agriculture and food security in the country. Also, the sector continues to be characterized with conflicts that pose serious security threats to the lives of mine workers and people living in mining communities. The lack of value addition to the country’s gold is also a crucial setback inhibiting the country to gain full benefits from its gold.  Addressing these challenges require a concerted effort by all industry players. With continued investment, innovation and cooperation among all stakeholders, Ghana’s gold sector offers a bright future for economic and national development.

Read more: The Small scale mining sector contributed largely to Ghana’s gold export growth in 2022

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