<\/p>\n
(Bloomberg) — There\u2019s no escaping gold in Tarkwa. It\u2019s in the forest. It\u2019s under your feet as you walk the streets of Ghana\u2019s biggest mining town. It\u2019s the economy. Exposed holes in the ground bear witness to attempts at illegally digging out some of the precious metal and a polluted river on the edge of town shows the consequences of the boom in semi-industrial scale mining.<\/p>\n
The environmental damage has triggered a wave of protest in the capital Accra demanding a ban on all small-scale mining operations in places like Tarkwa. In turn, anxious local politicians \u2014 ahead of national elections on Dec. 7 \u2014 have tried to reassure registered mines that they will be shielded from the government\u2019s threat to crack down on illegal activities, which it calls \u201cgalamsey\u201d.<\/p>\n
\u201cIn Accra, they want to ban you, but I\u2019m here to tell you that I support miners,\u201d George Mireku Duker, the deputy mining minister and a local legislator, told managers at four underground mines during site visits in October. Duker acknowledges that illegal mining is a \u201cworry\u201d, but he knows that a voter backlash against the New Patriotic Party government which he is part of could cost him his job on Dec. 7. He won the seat by just 101 votes in 2020.<\/p>\n
\u201cThe small-scale mining sector employs more than 1 million Ghanaians and large-scale mines employ less than 10,000,\u201d Duker told Bloomberg News. \u201cYou want to take their livelihood from them?\u201d<\/p>\n
The mines visited by Duker have existed since colonial times and are now operated either privately or for community use by Ghanaians to counterbalance the foreign grip on large-scale mining in the indebted West African country. These artisanal and small-scale (ASM) mines \u2014 defined as operations on an area smaller than 25 acres \u2014 produced more than a quarter of the four million ounces of gold Ghana officially mined in 2023, estimated to be worth $10.6 billion at today\u2019s prices, up from 10% in 2012.<\/p>\n
Equipped with heavy machinery and turbocharged by lax regulation, the ASM sector remains largely informal: by some estimates, as many as 70% of these mines \u2014 which have mushroomed in places like Tarkwa \u2014 are unregulated.<\/p>\n
The illicit gold rush is being powered by surging prices \u2014 up by more than a third this year to a record-high of $2,787 an ounce in October \u2014 and willing buyers in Dubai and beyond. The impact in Tarkwa is visible: tents at the top of slopes, with threadbare clothes hanging over wood panels hide the activities of a mine at the heart of the town while young men loiter outside Chinese machinery shops, offering their services as operators in exchange for a share of what is found in the rivers.<\/p>\n
The line between legal and illegal operators is often blurred. \u201cA lot of people do have a license,\u201d says Ishmael Quaicoe, head of the environmental and safety engineering department at Tarkwa\u2019s University of Mines and Technology, \u201cbut their operations don\u2019t conform with what the law asks them to do.\u201d<\/p>\n
Demonstrations in September and October focused on the impact of galamsey miners. But when the Trades Union Congress threw its weight behind the campaign it raised the stakes, calling for an outright ban on all small-scale gold mining to halt activity blamed for polluting rivers \u2014 one Ghana Water Company facility said in August that 60% of the raw water it treated was affected by illegal mining, depressing cocoa production and destroying forests.<\/p>\n
Both main political groups \u2014 the governing NPP and the opposition National Democratic Congress \u2014have traded accusations over the mining issue. And with elections around the corner President Nana Akufo-Addo responded to the calls for a ban by threatening to send soldiers to mining towns to crack down on galamsey operations.<\/p>\n
He has yet to follow through on that pledge, but the announcement triggered memories of a heavy-handed effort to close down illegal mining in 2017. The ban on ASM mining lasted about two years, but the move backfired on the government, with allies citing it as one of the reasons for the loss of its parliamentary majority in the 2020 elections.<\/p>\n
At least 4.5 million people \u2014 workers and dependents \u2014 rely on gold for their livelihood, according to a 2020 government estimate. So the timing of the protests has created a dilemma for the NPP which polls suggest could be headed for its worst-ever election results on Dec. 7, according to the Accra-based Global Analytics.<\/p>\n
For all its mineral wealth, almost 20% of people in Tarkwa-Nsuaem municipality \u2014 Duker\u2019s constituency \u2014 live in acute poverty, facing multiple deprivations from a lack of clean water to decent shelter, according to the Ghana Statistical Service. A shortage of educational opportunities means young people often gravitate toward the ASM sector\u2019s low-skilled and often dangerous jobs.<\/p>\n
\u201cThey are already dying from poverty so they don\u2019t hear you when you talk about the dangers of mercury or cyanide,\u201d says Elorm Ama Governor-Ababio who was arrested while participating in a protest by Democracy Hub \u2014 the activist organization \u2014 in Accra. \u201cYou put them through so much trauma that when they see a literal threat to their life they see it as a beacon of hope,\u201d adds Governor-Ababio, who denies any wrongdoing.<\/p>\n
Making the Good Delivery List<\/p>\n
School children in Ghana are taught that their country \u2014 known as the Gold Coast since British colonial rule \u2014 is so rich in the precious metal that the sand glistened as the first Europeans approached shore in the 15th century.<\/p>\n
In those early days, Akan traders bartered their gold dust for European alcohol, copper and even clothing. Centuries later Ghana remains Africa\u2019s biggest producer, with major operators such as the UK-based Anglogold Ashanti Plc, Gold Fields Ltd. from South Africa, American miner Newmont Corp and China\u2019s Chifeng Jilong Gold Mining Co. all active.<\/p>\n
At the other end of the scale are the ASM operators. Adwoa Pokuaa Boaduo, a mining engineer who wrote a doctoral thesis on the potential for artisanal and small-scale mining reform in Ghana, says a lack of compliance checks makes it relatively easy for licensed gold buyers to purchase from illegal mines, legitimizing their output.<\/p>\n
Rosemary Addico, who leads the responsible gold program at Solidaridad\u2019s West Africa \u2014 an NGO which encourages miners to follow global best practices \u2014 believes the onus should be on the buyers to scrutinize the source: \u201cOnce international buyers insist on some requirements, the traders will be more careful about where they are sourcing gold from and how it\u2019s mined.\u201d<\/p>\n
For gold to be accepted by the world\u2019s most demanding buyers, including central banks, institutional investors and luxury brands, it must come from refiners on the London Bullion Market Association\u2019s Good Delivery List. The influential trade body doesn\u2019t certify mines, but does make the refiners it accredits responsible for the gold in their supply chains, leaving many loath to accept anything directly from small-scale producers that could jeopardize their place on the list.<\/p>\n
There are, however, plenty of other willing buyers of Ghanaian gold with few questions asked. Nana Akwuasi Awuah, the head of the state-owned gold marketing company \u2014 and a number of market participants \u2014 say metal from the smaller illegal mines often ends up with Dubai refineries. None of these are on the LBMA\u2019s Good Delivery List, though the emirate does have rules requiring refiners to check that gold has been sourced responsibly.<\/p>\n
Once imported, the gold can be re-refined and sold as \u201crecycled\u201d bullion to jewelers in India and other markets further east, and even LBMA-accredited refiners, without reference to its origin. The LBMA requires refiners to conduct checks to ensure gold is sourced responsibly, but the reality is that the provenance of recycled gold can be very difficult to determine, according to a 2022 study published on the trade association\u2019s website.<\/p>\n
Illegal mining also carries an economic cost for Ghana, which is wrestling with more than $30 billion of external debt and secured a $3 billion bailout from the International Monetary Fund last year.<\/p>\n
If the industry was formalized, Ghana would earn more than double its revenue from gold this year, according to Martin Ayisi, the chief executive officer of Ghana\u2019s Minerals Commission, which regulates large and small miners. At least three-quarters of the country\u2019s artisanal and small-scale gold output isn\u2019t captured in export figures at all, he estimates. That\u2019s because it\u2019s either smuggled out by land to neighboring Ivory Coast, Togo and Burkina Faso, which have a lower withholding tax on unprocessed gold, or it\u2019s treated as a transshipment from one of these countries through Ghana, even though it was mined in Ghana all along.<\/p>\n
\u201cThere are all sorts of schemes to smuggle out the gold,\u201d says Ayisi. \u201cThere\u2019s one way to stop it, by further dropping the tax,\u201d which was cut to 1.5% from 3% in 2022, driving an immediate spike in Ghana\u2019s output.<\/p>\n
The Dubai Connection<\/p>\n
In 2023, the United Arab Emirates reported that $3.2 billion of gold (52.9 metric tons net weight) was imported from Ghana. That same year, Ghana reported exporting just $1.7 billion of the metal to the UAE (27.8 metric tons net weight), according to the United Nations\u2019 Comtrade Database. That amounts to a shortfall about $1.5 billion.<\/p>\n
Dubai \u2014 one of the seven emirates that make up the UAE \u2014 has no gold mines, and has positioned itself as a hub for the metal. The LBMA considers the UAE a high-risk jurisdiction and imposes additional checks for any gold sourced from there.<\/p>\n
But Safeya AlSafi, the UAE\u2019s acting assistant undersecretary for commercial control and governance at the Ministry of Economy, told Bloomberg News that the shortfall could be due to incorrect information from the country of origin, adding, \u201cI don\u2019t know exactly if there is any actual smuggling. We have a very strict system.\u201d<\/p>\n
At the Minerals Commission, Ayisi acknowledged challenges recording what leaves Ghana.<\/p>\n
Ghana was one of the first countries in Africa to legalize artisanal and small-scale mining, a sector which globally contributes about a fifth of the world\u2019s gold supply, according to a World Gold Council report. Today, most officials agree that further formalization is essential to curb smuggling and reverse the environmental fallout.<\/p>\n
The country has now joined a pilot program \u2014 along with Peru, the Philippines and Tanzania \u2014 to pre-approve some small-scale mines and sell their gold directly to refiners certified by the LBMA. But the lack of financial incentives to operate responsibly gives the miners little reason to join the pilot, critics say.<\/p>\n
The LBMA is partly motivated by a desire to secure more \u201cclean\u201d gold for its refiners, who are effectively losing out on a fifth of the global supply because of its stringent sourcing requirements. For governments it means they can sell directly to LBMA refineries, opening up a more formal market for their gold.<\/p>\n
\u201cWill we solve all of the evils of the world?,\u201d asks Neil Harby, the LBMA\u2019s chief technical officer. \u201cNo, but we\u2019ve got to start somewhere.\u201d<\/p>\n
Back in Accra, one of just three of Ghana\u2019s 16 regions that doesn\u2019t produce gold, the anti-galamsey movement is gaining momentum even if the protests have died down as the election focus has shifted to the economy \u2014 with inflation above 20% for more than a year \u2014 and a lack of jobs, in the country of 34 million. Billboard-sized images of brown rivers and reports of birth defects, allegedly linked to galamsey, have left voters with graphic images of the damage.<\/p>\n
Yet neither of the two main parties is in a position to fully capitalize on the anti-ASM anger. Both have at different times clamped down on illegal mining but have also have financially benefitted from \u201cillegalities in the small-scale mining sector,\u201d according to a 2021 report by a former environment minister, Kwabena Frimpong-Boateng.<\/p>\n
In 2022 Ghana passed a law that authorized mining in forest reserves earmarked for conservation. Out of these mining licenses, at least four have been granted by the government in reserves given special status due to their rare flora and fauna, according to The Fourth Estate, an investigative project by Ghanaian journalists.<\/p>\n
The Frimpong-Boateng report, which accused politicians on both sides of having a conflict of interest, was dismissed by the presidency as lacking evidence. But it prompted a probe by Ghana\u2019s Commission on Human Rights and Administrative Justice that is continuing.<\/p>\n
\u201cFor about two decades now, parties have been rewarding their loyalists with concessions,\u201d says E. Gyimah-Boadi, founder of the Accra-based non-partisan research network, Afrobarometer. \u201cThey are not going to expose themselves by committing to doing anything that will tie their hands.\u201d<\/p>\n
Richard Ahiagbah, the director of communications at the NPP rejects the claim, saying that the 2017 ban, shows the government is committed to clamping down on the ASM sector. The NDC also denies any conflict of interest during their own time in office. Samuel Gyamfi, the party\u2019s national communications officer, described the environmental crisis as \u201cunprecedented\u201d and blamed the NPP for it.<\/p>\n
For Dora Kowfia, a 54-year-old former artisanal miner, it is a confusing moment. She has has previously backed the NPP, but says that this time she doesn\u2019t know who to vote for. She now sells textile at a roadside stall outside Tarkwa, overlooking the Bonsa river, where the impact of illegal mining is visible in the brown waters.<\/p>\n
Asked if she was concerned about the pollution, Kowfia, echoing a widely held view in mining communities in Ghana, says: \u201cAccra is saying \u2018stop galamsey\u2019. I want leaders who will either protect it or bring us new jobs.\u201d<\/p>\n
–With assistance from Verity Ratcliffe, Ekow Dontoh and Michael Ovaska.<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92024 Bloomberg L.P.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
(Bloomberg) — There\u2019s no escaping gold in Tarkwa. It\u2019s in the forest. It\u2019s under your feet as you walk the streets of Ghana\u2019s biggest mining town. It\u2019s the economy. Exposed holes in the ground bear witness to attempts at illegally digging out some of the precious metal and a polluted river on the edge of […]<\/p>\n","protected":false},"author":1,"featured_media":259995,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-259994","post","type-post","status-publish","format-standard","has-post-thumbnail","category-top-news"],"yoast_head":"\n