On 6 April, the Canada-based Asante Gold Corporation announced that it was in talks with Kinross Gold to buy the Chirano mine in Ghana. The deal between the two Canadian companies illustrates Ghana’s desire to reassert control over its extractive sector as it would be financed by state funds backed by loans from the Ghana Infrastructure Investment Fund (GIIF) and the Minerals Income Investment Fund (MIIF).
The gold giant Kinross’ strategic redeployment explains the back-to-back sales of a Russian mine against the backdrop of the Ukrainian conflict and the Chirano mine acquired in 2010 in southwest Ghana. The major, which also operates five mines on the US continent and the Tasiast mine in Mauritania, has decided to develop its activities in Canada, where it bought the junior Great Bear Resources last February.
In this new configuration, Kinross is aiming to produce 2.7 MOZ of gold in 2022 and 2.9 MOZ in 2023.
The Chirano mine will be the seventh Ghanaian asset of Asante Gold Corporation, a Canadian junior that has focused on the world’s largest gold producer. Its projects include Bibiani, a mine in the western part of the country that was acquired in August 2021 for $90m and can produce about 100,000 ounces of gold per year over 10 years, and Kubi Gold, which is located near AngloGold Ashanti’s Obuasi mine in southern Ghana. With four Ghanaian directors, the junior Asante Gold is seeking to carve out a place for itself in the local mining sector, with strong encouragement from the Accra government.
Taking control of the extractive sector
On the Ghanaian side, this deal is part of the state’s desire to take back control of the extractive sector, in order to generate sufficient returns so that it can free itself from international aid, in accordance with the “Ghana Beyond Aid” policy vision formulated by President Akufo-Addo in October 2018. To achieve this, the head of state has set a course to efficiently exploit the country’s resources and increase royalties from domestic production.
State involvement in the hydrocarbon sector increased due to the 2016 law on oil exploration and production, which allows the Ministry of Energy to negotiate directly with foreign operating companies when awarding licences and to impose a minimum level of Ghanaian ownership (15%).
This dynamic has enabled the government to force the Italian major ENI and the national explorer Springfield to join forces in the oil and gas fields located in Ghana’s offshore waters, thereby favouring the Ghanaian oil junior.
Launching the $200m Ghana Mineral Fund (GMF) in 2018 was another step towards achieving this goal. This government instrument was created to collect royalties from mineral production resources, build a high quality industry and serve as a strategic lever for Ghana’s economic transformation.
After buying out several mining assets, the MIIF announced in March that it would invest $60m in 2022 in mines with high growth potential and acquired about $20m worth of shares in the Asante Gold Corporation, giving the government a 3.5% stake.
According to its director Edward Koranteng, the MIIF aims to manage more than $500m by 2025, which would make it one of Africa’s largest mining funds. With the proposed acquisition of Chirano, the Ghanaian government is taking a step forward as the transaction has been made possible thanks to a loan from the MIIF and GIIF.
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