Renegotiate Existing Mineral Contracts

– To enhance Ghana’s stake – IEA

By Elvis DARKO, Accra

The Institute of Economic Affairs (IEA) has put forward a series of transformative proposals aimed at maximizing Ghana’s ownership and benefits from its national resources.

In a policy document titled “Policy Priorities for the Incoming Government,” the IEA advocates for the renegotiation of existing mineral contracts to enhance Ghana’s stake.

The think tank also recommends amending the Minerals and Mining Act to mandate a minimum level of national ownership.

The IEA proposes that future mineral agreements should be based on “product-sharing” or “service contracts” to ensure a fair distribution of benefits.

Additionally, the think tank emphasizes the need to establish mineral processing factories in Ghana.

This national policy would transform raw minerals into refined products, significantly increasing export value and creating jobs.

Establishment of a GNPC-equivalent for minerals

The IEA further suggests the creation of a Ghana National Petroleum Corporation (GNPC) equivalent for minerals.

This entity would be responsible for negotiating with foreign mining companies, allowing Ghana to participate directly in mineral exploration and development.

The think tank also calls for the regular and adequate resourcing of the Ghana Geological Survey Department to map out mineral deposits, reducing reliance on foreign experts and minimizing the disproportionate share of mineral proceeds that currently go to them.

To support these efforts, the IEA advocates for the training of Ghanaian mineral and petroleum engineers to take charge of future exploration and development.

The think tank proposes incorporating this training into local-content provisions in mineral contracts.

Natural resources for sustainable development

The IEA stresses that implementing these policies requires substantial resources, which Ghana must mobilize to foster growth and development.

The think tank points out that despite Ghana’s wealth of natural resources—gold, manganese, diamonds, bauxite, uranium, copper, lithium, silicate, iron ore, oil, gas, and more—the country remains poor and dependent on foreign aid.

The IEA attributes this paradox to colonial-type concession contracts that allow foreign companies to extract almost the entire value of these resources, leaving Ghana with only minimal returns from surface rentals, royalties, and taxes.

The think tank argues that exporting natural resources in raw form leads to undervaluation, further depriving Ghana of the full benefits of its wealth.

Low hanging fruits

Natural resources represent the low hanging fruits available to be harnessed for the development of Ghana and every effort should be made to maximise the benefits to the country.

Except for manganese, Ghana recorded an upturn in the production and export of its traditional minerals in 2023.

$10 trillion unexplored gold reserves

Ghana has an estimated unexplored gold reserves valued at approximately $10 trillion, signaling significant potential.

The production of gold, the country’s dominant mineral, rose from 3.7 million ounces in 2022 to 4 million ounces in 2023

Gold production attributable to the large-scale sub-sector declined from 3.1 million ounces in 2022 to 2.9 million ounces in 2023, which translates into a downturn of 4.9%.

Conversely, the comparable outturn for the small-scale sub-sector grew by 70.6%, from 0.66 million ounces to 1.1 million ounces in the corresponding period

The production of manganese decreased by 5.4%, but that of bauxite increased by 24.1%.

900m metric tonnes of bauxite resources

Ghana’s total bauxite resources are estimated to be around 900 million metric tonnes, with significant concentrations in Awaso (60 million metric tonnes), Kyebi (160 million metric tonnes), and Nyinahin (700 million metric tonnes).

14.5 million metric tonnes of Lithium 

Australian mineral exploration company IronRidge Resources has reported a maiden mineral resource estimate (MRE) of 14.5 million tonnes (MT) at 1.31% lithium oxide grade (Li2O) for its Ghana Ewoyaa project. The MRE estimate – a method used to determine the ore tonnage and grade of a geological deposit – included 4.5 Mt at 1.39% lithium while 3.7 Mt at 1.38% in the central position of its main deposit, within a single continuous pegmatite body coincident with a hill.