Business News of Monday, 4 December 2017
Government is in the process of drafting a bill to be presented to Parliament for the establishment of the Ghana Integrated Aluminium and Bauxite Development Authority, to reflect President Nana Addo Dankwa Akufo-Addo’s commitment to establishing an Integrated Aluminium Industry to serve Ghana and Africa.
The Authority will play the important role of promoting responsible mining, and regulating the development of the industry. The Authority will be responsible for the development of the necessary infrastructure, including rail, roads and energy, industrial parks, and associated social infrastructure to support related businesses in the sector and the industry as a whole.
The Vice President of the Republic, Alhaji Dr Mahamudu Bawumia disclosed this at the ongoing Regional Forum on the extractive industry in Ghana, co-sponsored by the Government of Ghana and the Uongozi Institute, which is under the office of the President of Tanzania.
The three-day Forum is under the theme “Enhancing Value Addition in the Extractive Sector in Africa: Why is It Important and How Can it be achieved,” and brings together participants and experts from across Africa, Asia, Europe and America.
Explaining government’s decision to convene the forum, Vice President Bawumia said President Akufo-Addo was “committed to moving our extractive sector beyond the old paradigm as part of the vision to move Ghana beyond aid.”
The building of the integrated aluminum industry, he emphasised, is part of the government strategy to encourage the private sector to create and capture more value from our resources.
“As we deliberated on this paradigm shift and trying to make a break from the past, in drafting this new bill we thought it was very very important to get the best minds across the continent and in the world to discuss the whole issue of value addition.
One of the rationales for us as the presidency collaborating with the UONGOZI Institute on this was to bring the best minds together. You are the experts here, you are the thinkers, so we brought you here to basically deliberate quite rigorously on the best way forward.
“We don’t have all the answers. We want to learn from best practice and the experiences of other countries and thinkers in this area. We have very high expectations so that we can make good decisions at the end of the day.”
Citing figures from industry experts, Dr Bawumia said it was imperative for Africans in general and Ghana in particular to add value to her raw materials in order to reap bigger benefits.
“According to industry estimates, the price per carat increases roughly eightfold from rough diamond to polished gem-quality diamond. The earning margins are much higher in the upstream sector (16-20%) than in the middle market sector (1-8%).
“The value of bauxite increases nearly 6 times of refined into alumina and nearly 33 times if converted into aluminum metal alloy. Given the various stages of the value chain, I know which part I want to be in.”
The Vice President challenged the participants to deliberate extensively on the difficulties associated with value addition and come up with recommendations suited to the continent.
“While value addition is a laudable initiative, its implementation is not without challenges. Hence the need for this conversation.
“We should come out of this round table discussion with an extensive report on policy recommendations on how African governments can add value to our vast natural resources, bauxite in the particular case of Ghana, and with a clear road map on how it should be implemented.
“The push for Value Addition is also in recognition that exporting the resources in raw form and taxing only profits, in effect, export jobs, denies us the opportunities to gain any substantial part of the revenues generated from the range of activities along the value chain.
“As the 2nd largest gold producing country in Africa after South Africa and the 10th largest globally, why has Ghana been unable to successfully add value to its gold? Why are we still in the raw material export silo of our minerals? Is it a question of technology, of financing or of human resources? Or is it a question of leadership?
“What are the hindrances to promoting value addition to Africa’s extractive resources? What ought to be the role of government in promoting value addition to its natural resources? These and more should engage your attention,” Dr Bawumia stated.