NewsWest AfricaGalamsey gamble

Mon,20Nov2017

Posted on Tuesday, 23 May 2017 17:50

Galamsey gamble

By Billie Adwoa McTernan and Patrick Smith in Accra

rsz galamsey

Ghana's government wants to tackle unregulated small-scale mining as a means to reassure big foreign miners and to create jobs, but the mining industry feeds into criminality and environmental despoliation. The clock is ticking for the new government to find solutions that work for actors big and small

 

Early last year, as the ochre dust of the harmattan blew through the hills of Obuasi, overlooking one of the world’s richest gold reserves, hundreds of prospectors seized control of the mine concession owned by South Africa’s AngloGold Ashanti. Days earlier, the government had withdrawn its soldiers after a spate of attacks on the mine site, about 250km north of Accra. The fight in Obuasi has become a symbol of the crisis in Ghana’s mining industry, and its failure to benefit wider society.

Government officials failed to explain why they withdrew security from such an important asset, although insiders spoke of shadowy political manoeuvrings behind the scenes. One version had Ibrahim Mahama, brother to the then-president John Mahama, trying to intervene in the dispute. Ibrahim was said to have nursed a long-standing rivalry with mining magnate Sam Jonah, a former president of AngloGold who had tried to broker a deal with the small-scale miners demanding the right to work on the company’s concession. The death of John Owusu, a popular local mine official, during a confrontation on the site showed how the crisis was spinning out of control.

In Johannesburg, the AngloGold board lost patience with the negotiations in Obuasi and filed a suit against Ghana at the International Centre for Settlement of Investment Disputes in Washington DC. “If allowed to continue unchecked, this occupation of the lease area by illegal miners significantly undermines investor confidence and gravely threatens the long-term viability of the mine,” AngloGold told the tribunal.

VESTED INTERESTS

Galamsey – or small-scale miners – have become an easy target. They are accused of horrendous environmental damage, cutting down forests, poisoning rivers with mercury and cyanide, and exploiting child labour. But their operations were facilitated and often financed by local and foreign business networks that pay off local chieftains, politicians and security officers.

It was those vested interests that helped keep the galamsey story out of last year’s general election campaign. A third of Ghana’s gold is produced by small-scale miners, a business that turns over hundreds of millions of dollars, with workers earning a pittance and their sponsors often evading taxes and regulations.

President Nana Akufo-Addo’s government pledged to change all that, and is now faced with one of its most demanding tests. Finance minister Ken Ofori-Atta says resolving the impasse with AngloGold over Obuasi is a top priority. Many say the arbitration case could be quietly settled in the coming months.

Ofori-Atta also wants to set up a bi­annual forum between government and the chief executives of the top five local mining companies to improve trust and assure them of ‘policy stability’. But the more complex tasks are how to manage small-scale mining, to improve working conditions and safety standards, and to integrate the mining industry into the wider economy.

Plans for a mineral development fund to direct investment to local mining communities have long been on the drawing board. Now, the minister for lands and natural resources John Peter Amewu says there will be a new strategy for miners. But his promise – at the start of April –to end ­illegal small-scale mining within three weeks has been met with widespread scepticism. This is partly because most small-scale mining is, by definition, illegal, the product of desperation.

David Masterwille, who makes documentaries on the subject, is wary of government promises. Although small-scale miners get most of the blame for the environmental devastation, Masterwille argues that the big companies must do much more.

Around Obuasi, a town of some 180,000 people, 80% of the rivers and lakes are reckoned to be polluted with mining chemicals. The town’s crisis peaked when AngloGold suspended operations in November 2014 and laid off 6,000 workers, claiming the fall in the gold price had made the mine uneconomic. 

In the town centre, local men sit around playing draughts. Many of them are former AngloGold workers looking for work. “They should open the mine,” one of the men tells The Africa Report, “so Obuasi doesn’t become a ghost town.” 

NEW GOLD RUSH

Samuel Atta, a father of four, worked with AngloGold for 17 years. Like many of his fellow workers, he got a redundancy package of ¢100,000 ($24,000) when the mine closed. But with no other job prospects locally, he says he is struggling to get by after paying rent and school fees.

After AngloGold closed the mine, many prospectors moved in on the company’s 485km² concession, the biggest in Ghana, in a new gold rush. That’s when the fighting started. By September 2016, local groups, backed by the minerals commission in Accra, formed a movement committee to secure a deal under which AngloGold would relinquish some 60% of its concession to small-scale miners.

Led by local organisers such as Benjamin Annan, spokesman for the Association of Small Scale Miners, some of the miners moved to a site at Abedwum, on the outskirts of town. It is on part of the land relinquished by AngloGold, but small-scale miners have been working on the land for years.

And local businesses – selling torches, batteries, and steaming plates of food – have grown up around those mining operations. Each morning at dawn, workers trudge to the mine to extract more of the dark mud and rock that when processed will yield gold ore. “In our community, mining has been a part of our lives,” says one who requested anonymity. “We got to know it when we are growing up; it’s a skill we have developed.”

MAKESHIFT LADDERS

Conditions are tough. Teams of miners dig narrow shafts into the bowels of the earth with rudimentary tools. The chisellers follow them, chipping away at the rock in search of tell-tale gold streaks.

“The pits can go about 60m deep,” Annan says. At sites like Abedwum, workers use makeshift ladders to get down to the rock face, but they face many geological and environmental problems.

“At the level we are now digging at, water has started coming. We’re not getting access like we used to,” said a leader of the site’s security task force who has been working on the site for seven years. “We need investment [from government] in machines and water pumps that will engage us and not foreigners,” another miner says.

One of the first Obuasi gold rushes dates back to 1897, when British merchant Edwin Arthur Cade pitched up and negotiated a concession with the local paramount leaders. Gold mining in the area dates back centuries. The explorer Richard Burton referred to reports of those local riches when he spoke of an Eldorado in West Africa. The British colonial authorities quickly tried to bring the area under their control, granting mammoth concessions and banning local small-scale mining.

“When [the forerunner of] Ashanti Goldfields acquired the concession in 1897, we didn’t have a limit to concession size. So they were given 485km² […]. It covered five administrative districts: Obuasi, Bekwai, Adansi North and South, and Amansie Central,” says Richard Ellimah, executive director of the Centre for Social Impact Studies (CeSIS). Now, the population of these districts is close to 500,000 and mining is the main source of work.

In 2006, the government passed a new law to limit the size of concessions. But Ellimah says that AngloGold’s concession still exceeds that limit, even after it ceded 60% of the land. 

The government wants AngloGold’s reallocation deal to set a precedent for other companies, such as Newmont and Goldfields, to cut down their concession sizes. Belatedly, big companies have realised the political importance of small-scale miners.

In Ghana, rural land is mostly parcelled out by chiefs. But the subsoil, which holds the minerals, belongs to the state, which leases out the rights to exploit it. However, many of the small-scale miners do not go through the complex leasing process and instead cut deals directly with chiefs or other local officials.

A deal between then-president John Kufuor’s government and Canada’s Newmont Gold, dating back to 2006, has been much criticised by activists. It allows Newmont to hold a 100% stake in the Ahafo mine, to receive extensive concessions on import duties and to benefit from exemptions from value-added tax.

CHINESE PROSPECTORS

“In 2011, Newmont made a profit of $700m from the Ahafo mine. The Ghana government could have easily taken [a shareholding and] $70m,” complains CeSIS’s Ellimah. He also warns that the small-scale mining issue is bigger and more complex than most officials think.

He reckons there are about 500,000 illegal miners operating in Ghana. Official figures put the number at about 50,000, and the minerals commission has issued only 1,000 small-scale licences since 1989.

According to the South China Morning Post an estimated 50,000 illegal prospectors from China – many from Shanglin county, where there is much mining expertise – have set up small-scale businesses in Ghana. Although it is illegal for non-Ghanaians to go into small-scale mining, prospectors from China bring in mining equipment and set up illegal and lucrative operations with local partners. 

Much of the responsibility for the spike in illegal operations should fall on corrupt officials, says CeSIS’s Ellimah: “I think the politicians are involved; our chiefs too are involved. The police will not do anything, and you realise the military [is also] part of the problem.” Ellimah is sceptical of reports of arrests: “It’s like a PR gimmick to throw dust in people’s eyes. [Chinese people] are arrested, and the next day they are released. Who released them?”

Amewu and Akufo-Addo have staked the government’s reputation on dealing with the small-scale mining crisis in a way that will formalise and regulate the industry but also create jobs and attract investments. Mining accounts for 5.5% of Ghana’s gross domestic product and more than 35% of its exports.

COLONIAL ECONOMY

Gold exports alone had a value of $1.2bn between February 2016 and February 2017, according to the Bank of Ghana. Those figures do not include the substantial illegal exports on which no tax or royalties are paid, as well as all service operations that support mining.  

“We’re running a colonial economy,” says Yao Graham, coordinator of Third World Network-Africa, a policy advocacy organisation. “The state, historically, has been interested in minerals that generate foreign exchange, minerals of interest to foreign capital.” 

Graham argues that a serious industrial development strategy in Ghana would treat small-scale mining with as much seriousness as government gives to the mining conglomerates. With small- and medium-scale companies creating the most jobs, Graham says it should be a political imperative for government to strengthen links between small-scale mining and other economic sectors.

Back in Obuasi, many people want to see AngloGold resume operations, but they also seek some guarantees about jobs and working conditions. Officials at AngloGold tell The Africa Report that they are working on plans to reopen the mine.

In April, AngloGold announced that it will recruit some 2,000 workers – less than a third of its previous labour force. That is not going to fire up the Obuasi economy again. Perhaps a better deal for small-scale miners could play a part there, with more imaginative policies from minister Amewu. 

But for now, Obuasi town remains to be convinced – either by big mining or the government. Tina, who lives in Obuasi and runs a guesthouse, says the town’s economy has been rocked by the mine’s suspension. If business does not pick up, Tina says she may leave Obuasi to seek work abroad. “We're hoping that this government will do something […]. If not, in four years’ time it will be very difficult for him [President Akufo-Addo]. Who is going to vote for him?” 

From the May 2017 print edition 



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