Gold Price Slumps

The decline in international gold prices in the first quarter of 2013, combined with the high cost of operations, is leading companies to review their work plans and cut operating costs, says Daniel Owiredu, President of the Ghana Chamber of Mines. Spot gold has fallen by 17.2 percent this year, and the country’s output of the mineral dipped by 3 percent in the first three months of the year. This could lead miners to “either reconsider or downsize projects”, though investments at an advanced stage are likely to be continued, Mr. Owiredu said. Ghana’s gold production fell to 1.083 million ounces in the first quarter of the year, down by some 30,000 ounces from the last quarter of 2012, according to Bloomberg, citing data from the Minerals Commission. Gold is the country’s main source of foreign exchange income, which helps the Central Bank to accumulate reserves to supply to importers seeking to buy goods from abroad. The gold industry, categorised into large-scale and small-scale miners, is estimated to directly employ 114,205 people made up of professionals like engineers, scientists, accountants and administrators; artisans like carpenters, electricians, plumbers, machine operators and drivers; and some unskilled labour. An extended trend of falling output and depressed prices could threaten these jobs in the industry, as well as thousands of dependants. “While the depressed mood will adversely affect planned projects in the early part of the life-cycle, more advanced projects are expected to come on-stream,” Mr. Owiredu said. Additional gold production is expected from Golden Star Resources New Century Mine, as well as Newmont Ghana Gold’s Akyem Mine, albeit under stringent conditions, he added. Mineral revenue from producing members of the Ghana Chamber of Mines jumped by 14 percent last year to US$5.4billion from the US$4.7billion recorded in 2011. The increase was largely attributable to gold revenues, after the metal’s price increased by 7 percent in 2012. Investment in the mining industry by production, exploration and support-service companies also totalled US$1billion in 2012, according to the Minerals Commission. In that same year, mining companies maintained their position as the highest payers of company taxes to Government. Commenting on the illegal mining situation, Mr. Owiredu lauded Government for its recent crackdown on illegal miners, which is intended to bring sanity into the small-scale mining sector. He pledged the industry’s support to address the challenge and to ensure that the country benefits from responsible exploitation of its natural resources. Prof. Kofi Baneong-Yakubo, Chief Director of the Ministry of Lands and Natural Resources, said Government has charged chief executives of the various local governments to lead their assemblies in the fight to eradicate illegal mining in their jurisdictions. “The chief executives of the various assemblies will be held responsible for non-compliance. In fact, in mining areas this will constitute one benchmark to ascertain [their] performance,” he said. He gave assurance of Government’s commitment to prudence in management of the country’s natural resources sector.