IEA raises concerns over Akyem Gold Mine deal

THE Institute of Economic Affairs (IEA) has expressed serious concerns regarding the reported plan by US-based Newmont Company to sell its Akyem Gold Mine in Ghana to China’s Zijin Mining Group for $1 billion.

According to a statement from the IEA, the proposed deal raises several issues that are not in Ghana’s national interest and should be rejected by the government.

The IEA pointed out that the lease agreement for the Akyem Gold Mine, signed between Newmont and the Ghanaian government in January 2010, is set to expire in January 2025. Under the terms of the agreement, any transfer of the mine must be done within the unexpired term of the lease and subject to mutual consent between Newmont and the government.

The institute noted that as of now, there has been no agreement between the government and Newmont regarding the sale or transfer of the mine to Zijin. The IEA further highlighted that any company seeking to operate the mine beyond 2025 would need to sign a new agreement with the government.

The IEA also raised concerns over the alleged sidelining of Ghanaian investors who had bid for the mine but were reportedly outbid by Zijin. The institute emphasized that allowing a foreign company to take over the mine contradicts President Nana Akufo-Addo’s earlier statement in his State of the Nation Address in February, where he emphasized the need to prioritize Ghanaian investors in acquiring the mine to ensure that Ghana’s resources benefit its people.

In addition, the IEA criticized the original lease agreement between Newmont and the government, describing it as flawed. The institute argued that the royalties and taxes payable under the agreement were not properly quantified, leaving Ghana with minimal returns compared to the wealth generated by the mine. The IEA likened the agreement to colonial-era contracts that disproportionately favour foreign companies at the expense of the host nation.

The institute also underscored that the sale to Zijin could shortchange Ghana significantly. Based on an average annual gold production of 11.4 tonnes and a global market price of $2,600 per ounce, the IEA projected that the Akyem mine could generate over $1 billion annually for Ghanaian owners. In contrast, allowing Zijin to acquire the mine for $1 billion would only benefit Newmont, while Ghana would continue to receive meager royalties and taxes.

The IEA urged the government to reject the deal and explore alternative options, such as partnering with the private sector to acquire the mine under a public-private partnership (PPP) arrangement.

The institute referenced Canada’s recent decision to limit Zijin’s stake in its critical minerals sector for national security reasons and called on Ghana to adopt a similar approach to protect its economic and national security interests.

While the IEA clarified that it is not opposed to foreign investment in Ghana’s mining sector, it insisted that Ghana must retain dominant ownership of its critical resources to ensure the wealth generated is retained within the country.

The institute reiterated that Ghana’s natural resources are crucial to accelerating national development and alleviating poverty, and warned against continuing the practice of ceding valuable assets to foreign companies for short-term gains. The IEA concluded by calling on the government and parliament to scrutinize the proposed sale and prioritize Ghana’s long-term economic interests over any foreign transaction that could undermine the country’s development goals.