EXTRACTIVE INDUSTRIES

Solid Minerals

The mining industry has long been an important pillar of economic activity and international trade. Prior to independence, Ghana was known as the Gold Coast because of the rich mineral deposits.  Today Ghana is the second leading gold producing country in Africa after South Africa, and ranked 10th in terms of world production of gold.¹ The mineral deposits still in the ground provide a strong endowment to build a dynamic and robust economy. About 20% of the country is under mineral concessions and up to 70% in specific regions. There are reports on the occurrence of chromite, asbestos, andalusite, barite, mica, nepheline, syenite, cassiterite, columbite, monazite, beryl, spodumene, molybdenite, on-shore alluvial ilmenite and rutile, among others. Gold is the most visible mineral mined in commercial quantities. The export earnings from gold stood at US$1,277.2m in 2006 and US$1,733.78m in 2007 (2008 Budget statement).

The sector is consistently the highest gross foreign exchange earner from 1999. The mining sector contributes about 12% of Ghana's total corporate tax earnings, 34.3% of total exports, 11-12% of government revenue (IMF). The sector's share of GDP has increased from 1.3 per cent in 1991 to 5.1% in 2005, 5.5% in 2006 and 6.7% in 2007 (2008 Budget statement). The sector also employs about 15,000 people in the large scale mining industry while over 500,000 people are engaged in small-scale gold, diamond, sand wining and quarrying.  In 2005 export revenues from mineral sector amounted to US$1 billion. Total Foreign Direct Investment (FDI) into the minerals and mining sector from 1980 to 2005 amounted to US$6 billion.²

The number of mines increased to 17 by 2006 and exploration companies, non existent before the reforms, reached 200 by 2005. The country host two of the world's largest mining companies Anglo-Gold Ashanti and Newmont.  

The major gold and other mineral producing companies in Ghana are: Goldfields Ghana Ltd. - South Africa (Tarkwa and Damang mines); AngloGold Ashanti - South Africa (Obuasi, Bibiani and Iduapriem mines); Golden Star Resources (Bogosu/Prestea and Akyempim mines); and recently Redback Mining Ltd (Chirano mine) and Newmont Ghana Gold Ltd - United States (Ahafo mine). Newmont’s Akyem mine is expected to start production in 2009. Ghana Manganese Ltd. (Nsuta), Ghana Bauxite Company (Awaso) - Alcoa Inc. of the United States.

Oil and Gas

In June 2007, UK-listed Tullow Oil PLC announced that a significant oil discovery had been made at the Mahogany-1 exploration well in the West Cape Three Points license off the Ghanaian coast. In August 2007, the Hyedua-1 well, drilled in the adjacent Deepwater Tano block, confirmed the find.³ The field, now known as the Jubilee field, constitutes Ghana’s most significant and viable deposit of oil. It is still difficult to quantify Ghana's oil wealth, as appraisal is still under way. Speculations about the size of the find range from 170m to 1.3bn barrels.⁴

With an estimated production of about 40,000-150,000 bbl per day, the expected government revenues from oil could be much bigger than mining. According to the second EITI Aggregator's report, government receipts from the mining sector, including royalties, taxes and dividends, totaled US$27m in 2004. A major issue is how to balance the investment in both sectors, for 2008 it is expected that over US$400m is required in the oil sector.

Companies engaged in exploration include Tullow Oil (UK/IRL) and Kosmos (US), US Firms Anadarko and Sabre.⁵ The Ghana National Petroleum Corporation (GNPC) is carried through the exploration and development phases (i.e. does not financially contribute to the costs incurred during these phases). The carried interest is 10% in each block.⁶ GNPC has the option to take additional interest which has to be paid for. Other companies active in exploration include Vanco Energy (US) and LukOil (RUS), Afren4 (UK) in the Keta (Amerada) Hess (US), GASOP, a subsidiary of Nigerian OMEL in the Saltpond Basin; and Saltpond Offshore Producing Company, a partnership between GNPC and the Houston-based Lushann-Eternit in the Saltpond Field. According to the Budget Statement for 2008, exploration agreements with three other international oil companies have been signed.

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¹ Ghana Chamber of Mines, 2007
² Ghana Minerals Commission
³ Ghana currently produce only 700bbl per day from the Saltpond field, www.geiti.gov.gh
⁴ Ghana National Petroleum Corporation, The Upstream Petroleum Industry in Ghana
⁵ Tullow Oil PLC, Kosmos Energy, LLC, United States Department of Energy, Energy Information Administration, West Africa (ECOWAS) Energy Data, Statistics and Analysis, June 2006
⁶ United States Department of Energy, Energy Information Administration, West Africa (ECOWAS) Energy Data, Statistics and Analysis.