Exploring Mining Industry: Are Ghana's National Mining Giants Gaining Unwavering Support?
Ghana's Acquisition of Chirano Gold Mine Boosts Extractives Sector and Encourages Local Entrepreneurship
Asante Gold Corporation has taken over the operations of the Chirano gold mine in Ghana, following a deal worth US$225 million with Canada's Kinross Gold Corporation. The takeover, financed through public funds, is expected to support the recovery of Ghana's extractives sector, which contributes to over 5% of the nation's GDP.
The acquisition has significant implications for Ghana's extractive sector and aligns with the government's vision of creating a self-reliant economy, with President Nana Akufo-Addo championing the 'Ghana beyond aid' initiative. The investment in the Chirano gold mine is symptomatic of Ghana's ambitions to enhance its control over the exploitation of its mineral and oil resources.
With the Ghanaian government having previously held a 10% stake in the mine, the acquisition should reflect a strengthened stance by the nation to defend its interests in the domestic mining sector. The management team of Asante Gold includes four Ghanaians, underscoring the government's commitment to supporting local entrepreneurs. Nevertheless, official approval of this substantial takeover has yet to be publicly announced by the Ghanaian government, presenting an opportunity to further demonstrate its support for local businesses.
Ghana has financed the acquisition through the mobilization of the Ghana Infrastructure Investment Fund (GIIF) and the Minerals Income Investment Fund (MIIF). This move positions Asante Gold to develop mining operations at the Kubi Gold and Bibiani Mines. The investment from government funds has endowed Asante Gold with a substantial resource to invest in the Chirano gold mine, estimated at nearly US$500 million.
Lessons can be drawn from Zambia's experience in nationalizing the mining industry. Though the country nationalized its mining industry in 1969, copper production plummeted during the subsequent two decades. It was only after privatization that production figures returned to pre-nationalization levels in 2019.
However, the Zambian government has recently been reasserting its control over the mining industry to boost the economy. In 2021, the Zambian state acquired all shares in the Mopani copper mine and expropriated the Vedanta-owned Konkola Copper Mines. Supporters argue that the buy-back policy, when executed strategically, could revitalize the Zambian economy.
Comparing the experiences of Zambia and Ghana, it becomes evident that the support of competent, private national champions is crucial in regaining control over a nation's mineral and oil resources while fostering sustainable economic growth. Just as the Copperbelt Energy Corporation Plc, a local power supplier to the mines in Zambia, expanded its operations under the guidance of indigenous Zambians, the success of Asante Gold in Ghana reinforces the need for local participation in the extractive sector.
Tom Klause's 1981 assertion that African governments should rely on private enterprises remains relevant today as Ghana seeks to nurture local entrepreneurship in mining. As African countries explore ways to control their mineral and oil resources, the support of national private champions can prove instrumental in achieving the economic ambitions of these nations.
- The Government of Ghana's investment in the Chirano gold mine through the Ghana Infrastructure Investment Fund (GIIF) and the Minerals Income Investment Fund (MIIF) demonstrates their commitment to local development.
- Asante Gold's acquisition of the Chirano gold mine, financed through public funds, aligns with the Ghanaian government's economic policy of fostering self-reliance, as outlined in the 'Ghana beyond aid' initiative.
- The government's support for local entrepreneurs can be seen in the inclusion of four Ghanaians on the management team of Asante Gold, the new owners of the Chirano gold mine.
- Sustainable economic growth in the energy sector, as seen in the case of Asante Gold in Ghana, could potentially be bolstered by strategic partnerships between governments and private national champions, as shown by the Copperbelt Energy Corporation Plc in Zambia.
