Dependence on the mineral sector is central to economic reforms in Africa. These reforms have the objective of increasing economic growth and reducing poverty. Mineral endowed countries such as Ghana have been successful in attracting foreign direct investment (FDI) to the mineral sector through liberalisation of mining codes, which provide generous concessions to foreign multinational mining companies. UNCTAD (2005) indicates that a large proportion of FDI to Africa has gone into the mining sector with the continent attracting mining investment to the tune of $15 billion in 2004. This represented 15% of the global total and a considerable increase of 5% from the mid-1980s.
According to Kwasi Barning (n.d.) foreign exchange earnings from mineral production in Ghana increased from $108 million in 1985 to $710 in 1999. This could be attributed to the gold price hikes, reforms of the mining regulatory framework of Ghana, which provided mining companies generous tax exemptions, facilities for profit repatriation and stability of investment. Mining districts such as the Wassa West District became the location of eight multinational surface mining companies from the late 1980s.
Gold Mining in Ghana – The Jungle Booms
The gold industry goes through ‘boom and bust cycles’. Ghana has experienced three gold rushes in periods described as Jungle Booms. These were:
1st Jungle Boom: 1892 and peaking in 1897. It marked the period of industrial mining in Ghana in places like Tarkwa, Obuasi, Konongo and Pres-tea. The resistance against British domination during the Yaa Asantewaa War disrupted the 1st boom in 1901;
2nd Jungle Boom: from 1925 when efforts were being made to revive the economic distress associated with the World War One. Also disrupted by World War Two from 1939;
3rd Jungle Boom started in the mid-1980s as part of the efforts to address economic decline of the early 1970s.
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Economic decline and debt burden;
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High Gold prices;
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Privatisation of state gold mining concerns;
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Technology for mining low grade ore and adopting cost effective modes of mining; for instance, changing from underground mining to surface mining;
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Neo-Liberal economic policies;
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Strong desire of government to attract FDI through generous incentives, e.g. AngloGold Ashanti and Newmont Ghana Gold Limited have negotiated a retention of 80% of gross mineral sales in off-shore accounts;
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Weak environmental standards;
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Incentives for attracting multinational mining companies;
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Weak and liberal regulatory framework which allowed repatriation of profits; stability agreements; low royalty payments and tax exemptions; over protection for foreign companies in cases of disputes; poor compensation payment regimes and relatively lower remuneration for employees.
Regulatory Frameworks & the Challenges to Community Rights
The weak environmental standards help mining companies to externalise environmental cost, which helps companies to maximise profits. There are no legally binding environmental standards; EPA accepts that there are no laws on cyanide spillages.
Inadequate protection of community rights in the mining law. For example, whilst the 1992 Constitution of Ghana makes provision for citizens to go to the High Court on original Jurisdiction on Compensation issues, in the case of mining, compensation grievances are supposed first to be made to the Minister responsible for mines without direct recourse to the High Court.
Section 20 of the constitution states that ‘Records, documents and information furnished or attained should be treated as confidential and shall not be divulged without the written consent of the holder’. This section gives blanket confidentiality to all information including information on mining impacts on communities and the environment. It thus makes it difficult for the public to have access to reports such as Environmental Audit reports.
The Minerals and Mining Act, 2006 (Act 703) gives the power to the President to acquire land for mining through compulsory acquisition or to authorise its occupation and use (Section 2 of Act 703).
The Challenge to Development & Governance
The expectation is that the success in attracting FDI in the mining sector would contribute to economic development of Ghana and improve the living conditions of mining communities.
The UNDP concept of development states that the basic objective of human development is to enlarge the range of people's choices to make human development more democratic and participatory. These choices should include access to income and employment opportunities, education and health and clean and safe physical environment. Each individual should also have the opportunity to participate fully in community decisions and to enjoy human, economic and political freedoms (UNDP, 1991).
The 1992 Constitution of Ghana guarantees property ownership by individual citizens whilst mineral ownership is vested in the President of the Republic of Ghana. It is the inalienable right of mining communities to use their lands and resources for economic and social wellbeing in the context of the UNDP concept of development.
The mining problem raises the constitutional issue of compulsory acquisition of community lands and properties to be appropriated by private mining companies. Another issue is the appointment of Parliamentarians in mining areas to serve as members of the Board of Directors of mining companies. Parliamentarians who have a constitutional mandate to serve the interest of their electorates work instead to serve corporate interest.
Surface mining is an enclave economic activity. It is predatory on other sectors of the economy. It leads to the loss of land-based economic activities because of the competition between farming and surface mining for land. Newmont's Ahafo mine would displace about 20,000 farmers at the end of the first and second phases of the mine's operations. The operations of Goldfields Ghana Limited displaced 30,000 people in 5 years in the late 1980s. Low compensation payment and loss of incomes demonstrates the economic phenomenon often described as the ‘Dutch disease’. For example, Newmont paid 69,000 cedis (about $8) for a Cocoa tree to Cocoa farmers in Kenyase when a Cocoa tree can earn a farmer about half a bag of Cocoa beans for a year (about $25 per year) and the economic life of a Cocoa tree is between 40 and 50 years.
Notwithstanding the failures of compensation to adequately account for the loss of assets and earnings government of Ghana officials and mining company executives argue strongly that the benefits of mining outweigh the costs. The benefits include:
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Payment of royalties: Companies pay 3% of gross minerals mined as royalties but we need to note that the Mining Law sets the royalty payment at 3–6% of the value of gross minerals mined;
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Mining accounts for about 38% of the country's foreign exchange earnings and yet its contribution to GDP is 5–6%. Contribution of gold production to GDP is far less at about 1.8%;
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Payment of Income tax;
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Mining employs about 15,000–18,000 people which is less than 1% of the total workforce in the country (TUC, 2007);
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Mineral revenues: UNCTAD (2005) noted that from total mineral revenue of about $870 million in 2003, only $46.7 million, or 5%, was retained in the Ghanaian economy. Newmont's Ahafo mine, for instance, would contribute $300 million in 20 years to the economy of Ghana but the annual gold production for Ahafo mine is 500,000 ounces at a production cost of $250 per ounce. In 2008 the gold price broke the $1,000 barrier;
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Corporate Social Responsibility of mining companies: Private Enterprises Foundation (PEF) estimates that corporate bodies spend 0.5–1% of profit after tax on CSR.
Land Use Conflicts
One of the most significant areas of conflict between mining companies and local communities relates to land. The compulsory acquisition of large tracts of indigenous lands for surface mining operations has unleashed many land use conflicts. Surface mining operations are undertaken in rural communities where the people are predominantly farmers. Some of the consequences of mining investment to Ghana include:
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Social disruption;
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Capital flight;
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Displacement of communities;
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Resettlement/Relocation problems;
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Low compensation;
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Land use conflicts;
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Loss of biodiversity;
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Environmental degradation;
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Increased diseases;
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Pollution of water bodies;
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Cyanide spillages: there had been about 13 officially reported cyanide spillages since the 3rd Jungle boom;
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Destruction of sacred/cultural sites;
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Human rights abuses;
Challenges in Mining Advocacy
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The capacity gap between mining communities and multinational mining companies;
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Lack of organisation for mining communities;
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The tendency of government agencies to protect corporate interest as against the sovereign rights of citizens and mining communities;
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Weak legal framework for mining; weak environmental standards; weak regulatory institutions;
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Attraction of mining investment in Africa – the ‘race to the bottom’;
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Intimidation of communities which result in the loss of confidence in struggles to protect community rights;
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Difficulties in using the judicial system to redeem community rights. The case of forced eviction brought up by the people of Nkwantakrom against AngloGold Ashanti, Iduapriem mine has been in court for almost 10 years;
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The tendency of research/academic institutions and experts to serve corporate interests;
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Pushing neo-colonial policies as development agenda to exploit developing countries and deliberately branding mining advocacy groups as anti-development agents;
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Intimidation of activists and resource constraints.
Interventions of WACAM
WACAM is a community-based Human Rights and Environmental mining advocacy NGO working to build the capacity of mining communities to have effective engagement with multinational mining companies. Our organisation had organised communities affected by surface mining operations around their critical issues of concern and engaged in advocacy and campaigns for the protection of the rights of mining communities. Our interventions include:
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Understanding the struggle and developing the appropriate strategies to empower communities for effective participation in decisions affecting them. Information and education as tools for empowerment of affected people;
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Addresses weak capacities of communities through sensitisation using RBA;
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Formation of community groups to address lack of organisation and to better articulate communities’ view/ concerns;
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Development of youth programmes;
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Using community concerns to build campaigns at the local, national and international levels
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Use of courtroom advocacy to redeem rights and test the efficacy of laws/ regulations;
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Policy advocacy based on communities’ concerns e.g. mining law reforms and mineral policy for Ghana;
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Amplifying the voice for the mining communities through media sensitisation and developing links between the media and affected people.
Prof. Kassim Kasanga, an eminent valuation Consultant, Land Economist, former Chairman of Land Valuation Board and former Minister for Lands and Forestry stated in a presentation in 1997 and 2002 that there is injustice in the payment of compensation by mining companies to mining communities.
The former Minister for Mines, Mrs Cecilia Bannerman was reported to have said that Ghana had run short of gold to be used by the local jewellery industry, in spite of the gold boom (Daily Graphic, 11 November 2004).
According to the TUC (2007), mining employs about 15,000–18,000 people which is less than 1 % of the total workforce in the country but causes employment losses through displacement of communities.
Mineral revenues: UNCTAD ( 2005 ) mentioned that out of a total mineral revenue of about $870 million generated in 2003, the government of Ghana earned only $46.7 million representing 5%.
H.E. Mary Robinson (Former UN High Commissioner for Human Rights and Former Prime Minister of Ireland) in November 2006 at the UN Global Compact meeting in Ghana expressed worry about the minimal benefits of mining to Ghana and human rights abuses/violations in mining communities.
H.E. Vice President of Ghana on 15 January 2007 expressed concern about the minimal benefits from the mining sector to Ghana at the international meeting of the Extractive Industry Transparency Initiative (EITI) in Accra.
H.E. the President of the Republic of Ghana in May 2007 was reported in the Daily Graphic that there was the need to change the mining policy of Ghana to make mining beneficial to the country.
President J. A Kufour stated recently at AGOA Conference that FDI inflows should not be in the extractive sector only but should shift to manufacturing.
The Western Regional Minister said in September 2007 that activities of mining companies had led to loss of livelihoods and poverty in mining communities.
Conclusion
An assessment of the performance of Mining in Ghana by the World Bank's Operations Evaluation Department (OED) noted:
It is unclear what gold mining true benefits are to Ghana. Large scale mining by foreign companies has high import content and produces only modest amounts of net foreign exchange for Ghana after accounting for all its outflows. Similarly, its corporate tax payments are low due to various fiscal incentives necessary to attract and retain foreign investors. Employment creation is also modest given the highly capital intensive nature of modern surface mining techniques. Local communities affected by large scale mining have seen little benefits to date in the form of improved infrastructure or services provision because much of the rents from mining are used to finance recurrent, not capital expenditure. A broader cost-benefit analysis of large-scale mining that factors in social and environmental costs and includes consultations with the affected communities needs to be undertaken before granting future production licences (World Bank, 2003).