Ghana Could Lose Billions Annually if Newmont’s Mine Sale Proceeds

The Institute of Economic Affairs (IEA) has labelled the proposed sale of Newmont’s Akyem Gold Mine to China’s Zijin Mining Group for $US1 billion as flawed, stating it could significantly undermine Ghana’s economic interest.

IEA, in a press statement, noted that such a move could significantly reduce the country’s long-term financial benefits arguing that Newmont’s annual gold production at the mine could generate over US$1 billion per year in revenue if it remains under local ownership.

Selling the mine to Zijin for a one-time payment of US$1 billion, however, they noted, would drastically limit Ghana’s future earnings to just minimal royalties and taxes, making it a costly economic error.

The Akyem mine, one of Newmont’s most productive assets in the country, is currently operating under a lease agreement signed in 2010, which is set to expire in January 2025. According to the IEA, Newmont’s decision to sell the mine within this lease period requires the approval of the government, a step the IEA insists has not yet been completed.

The IEA also pointed out that several Ghanaian investors had shown interest in purchasing the mine but were reportedly outbid by Zijin. This decision, in its view, contradicts President Nana Addo Dankwa Akufo-Addo’s earlier commitment, expressed in his State of the Nation Address, to give preference to local investors in such deals.

“The sale of the Akyem Gold Mine to a foreign entity would undermine Ghana’s sovereignty over its mineral wealth and deprive Ghanaians of the opportunity to benefit from this valuable national resource,” the IEA emphasized in its statement.

The agreement failed to appropriately quantify royalties and taxes, leading to a scenario where foreign companies reap the majority of the benefits while the country receives only marginal financial returns. In that regard, IEA calls for a complete overhaul of Ghana’s approach to its mining sector.

Drawing comparisons to Canada’s recent decision to limit Zijin’s involvement in its mining sector, the IEA suggests that Ghana should similarly act to safeguard its national interests. They do not oppose foreign investment outright but stress that Ghana must retain majority control over its key natural resources to secure sustainable economic growth.

“The usual excuse that Ghana lacks the capital and expertise to exploit its own resources is no longer valid,” the IEA said,

The IEA, therefore, proposed amending the Constitution to transfer the ownership of the country’s natural resources from the president to the state to improve accountability; and second, implementing measures that would prohibit outgoing administrations from finalizing major contracts during the last months of their tenure.

Source:thehighstreetjournal.com