Ghana's gold enriches MNCs, not its own people

In 1957, Ghana became the first black African nation to gain independence from European rule. As a British colony, the country was known as the Gold Coast, an unambiguous reference to its most valuable resource. In fact, even before the arrival of the Europeans in the 15th century, Arab and Jewish traders crossed the Sahara from the north to buy gold in exchange for cloth, salt and spices.

Today, gold is Ghana’s most valuable export: in 2005, us $1.4 billion worth of gold were shipped from the country, dwarfing the value of its other major foreign currency earnerss, timber and cocoa. Ghana contributes 12 per cent of the world’s gold production. However, very little of revenues stay in the country.The reasons are typical: despite almost 50 years of political independence, Ghana, like most African nations, remains largely dependent on foreign investment, having undergone extensive liberalisation in the 1990s under the diktat of the World Bank and International Monetary Fund (imf). This means that companies supplying foreign capital, technology and management in the mining sector have replaced state enterprises in exchange for large concessions and a token royalty of 3 per cent of profits.

Two distinct groups of gold miners have emerged over the past decade or so: foreign companies conducting large-scale operations; and local small-scale miners, the majority of whom operate illegally on concessions awarded to foreign companies. The number of illegal miners, or galamsey, as they are known locally, has boomed of late as the price of gold has risen, mirroring a loss of confidence in the us dollar. To understand how these two groups of miners relate, I visited some of Ghana’s important mining areas.

What lies beneath

Rickety shaft: Higher wages for miners involve such dangers

A string of chaotic and tumbledown towns dotting Ghana’s gold belts provide little evidence of the hundreds of millions of dollars worth of gold extracted, processed and flown out from the surrounding lands every year. I first visit an illegal mine at Noyem, near the town of Nkawkaw, 180 km north of Accra, the capital, in the country’s eastern region. The land is part of a concession owned by the us -based Newmont Mining Corporation. It contains rich fracture zones from the main gold vein, which over the last few years have attracted thousands of galamsey miners. Before heading off to explore the site we talk with the local chief. We then spend the afternoon on site talking with some of the estimated 25,000 individuals who work in shifts round the clock to dig, crush, sift and separate the gold deposits, which first appear as specks in buckets.

As in most countries, in Ghana, the law states that while land may be privately owned, all the minerals under the ground belong to the state. In many African countries where traditional tribal structures and relations have managed the land for generations, this automatic transfer of ownership and rights to a distant government causes a number of problems and potential conflicts.As a prerequisite for the kind of market-based reforms promoted by the World Bank, this legal institution enables the government to sell tracts of mineral-rich lands to private mining companies who produce 88 per cent of the country’s gold. Given labour and capital costs in Ghana, mining companies spend roughly us $200 to extract an ounce of gold. Since the price of gold has increased to well over us $600 in recent months, this is clearly very profitable.

The Noyem site contains plenty of ‘free’ gold, not attached to any other mineral. Here, the galamsey are mainly engaged in ‘dig and wash’: the gold-rich surface deposits are dug up, crushed if necessary, and washed down a wooden chute, or sluice box, covered in towels and carpets which capture the heavier deposits. These are then rinsed every hour or so into a bucket, the contents skilfully sifted and separated until a small amount of material is left. At this stage the gold particles are clearly visible. The final task of consolidating the gold can be achieved in a number of ways, though the most common approach used is to add mercury