New regulations in Ghana aid fight against illegal mining

The country has been attempting for several years to combat the problem of illegal mining, in which foreigners join or compete with indigenous, small-scale miners in an untaxed activity that is meant to be the preserve of Ghanaians. An update to the legislation covering the mining sector, if approved, will provide law enforcement agencies with additional powers to tackle the problem. The proposal is expected to be voted on in late 2015. While it is unclear how many people are involved, as many as 50,000 foreigners are alleged to have been working illegally in the sector in the past, according to press reports. George AbraduOtoo, managing director of the state-owned Precious Minerals Marketing Company, told OBG, “The mining sector not only needs tighter regulations, but better supervision of the laws in place.”

Operational Structure

In a typical illegal operation foreigners find a local Ghanaian partner to work with. This may mean bribing police or local leaders in order to access land, or finding an existing Ghanaian small-scale miner and providing them with equipment and capital to scale up production. These methods have caused a rise in untaxed production, mostly of gold, as small-scale mining, both illegal and legal, has gone from accounting for 15% of gold production in 2008 to 34% in 2013, according to figures from the Minerals Commission, the sector regulator, and the Ghana Chamber of Mines (GCM).

Scaling up of unregulated activity also presents environmental challenges. The production of cocoa, Ghana’s third-largest export, is being threatened as some of the land suitable for cocoa trees is also considered ripe for gold explorers. Some of the most impacted areas include the Kyebi region, where alluvial deposits are found along the Birim River, and the Ashanti region, where the Ofin River is a major target for exploration. In a 2013 report, the GCM said, “Should illegal mining activity continue unabated, revenue from the country’s main cash crop will slump.”

Production Impacts

In general, foreigners have tended to argue that their role is merely to provide technical assistance to legal operations, but the government does not agree. In 2013 raids at illegal mining sites resulted in 4592 Chinese workers being deported, an action that partly explained a drop in gold exported through the PMMC, a government entity charged with buying gold from small-scale miners to market outside the country. It recorded a 32% fall in purchases between 2012 and 2013 from 8.9m grams to 6.13m grams, according to PMMC data.

But neither the recent legal actions nor a drop in gold prices has reduced the urgency of the problem, in part because many of the people deported have returned, according to the Minerals Commission. Under the current law, prison terms for violations are capped at three years. New legal amendments to the Minerals and Mining Act of 2006 would increase penalties for both foreigners involved and their local partners. Law enforcement agencies would also be given new powers, including the ability to confiscate equipment, according to the Minerals Commission.

The issue of illegal mining has even negatively impacted Ghanaian-Chinese relations, and in January 2015 Sun Baohong, China’s ambassador to Ghana, said the embassy would develop an educational campaign for its citizens to clarify Ghana’s laws and regulations on mining. In April 2015 Nii Osah Mill, the minister of lands and natural resources, also said the ministry will be putting up signs that explain legal restriction on small-scale mining in the arrival hall of Kotoka International Airport in Accra in English, French and Chinese.

Improved organisation among local small-scale miners would also help, according to the GCM. While a licensing regime exists for Ghanaian miners, not many have complied, and actors involved range from one-man bands to much larger operations. The state is considering additional laws to address this issue.

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The Report: Ghana 2016

Mining chapter from The Report: Ghana 2016

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