Known as the Gold Coast during British colonial rule, Ghana has been a significant source of the precious metal. In 2017, however, gold mining was overshadowed by news of a major investment agreement intended to develop the country’s substantial bauxite reserves.
In June 2017 it was announced that China and Ghana had signed a memorandum of understanding (MoU) to develop a $10bn bauxite project – including a mine, refinery and railroad – in the West African nation. Gideon Boako, an economic adviser to Vice-President Mahamudu Bawumia, told local media, “We have a lot of mineral resources, so we want to build the railways and refineries to get the bauxite out of the ground. If we refine the bauxite, that alone is going to generate an export value of around $460bn.”
Ghana’s existing industry is centred around one firm, the Ghana Bauxite Company, and its mine in Awaso. According to statistics from the Ghana Investment Promotion Centre, production has fluctuated significantly in recent years, rising from 400,000 tonnes in 2011 to 908,586 tonnes in 2013, before falling 12% in 2014 to 798,114 tonnes. More recently it has seen an increase, with the project’s output hitting a record high of 1.01m tonnes in 2015.
Despite the long history of domestic aluminium production, value addition is currently limited. In 1948 Ghana established its first smelter in the city of Tema, which was controlled by the Volta Aluminium Company (VALCO), one of the largest on the continent at that time, and powered by the Akosombo hydroelectric plant. However, disputes over the price of electricity sold to the smelter from Akosombo led to intermittent closures in the following decades, and in 2016 it was one of five state-owned enterprises – out of a total of 18 – to operate at a loss. There is also a link missing in the chain: Ghana exports raw bauxite but imports alumina, the refined bauxite needed to smelt aluminium.
However, the aluminium sector is set to receive a major stimulus under the current administration. At an event in Geneva in March 2017 President Nana Akufo-Addo announced that a new government entity would be established to oversee the development of an integrated aluminium industry. In the same month Ken Ofori-Atta, the minister of finance, outlined a six-point strategy for developing the industry. The plan includes opening new bauxite mines in Awaso, Nyinahin and Kyebi, the construction of an alumina refinery, and the development of energy and rail infrastructure to power the industry and cut transport costs. The VALCO smelter will also be upgraded and an industrial park for the development of value-added aluminium products established.
The MoU signed in June 2017 could provide the necessary financing to turn the project into reality. According to the senior minister, Yaw Osafo-Maafo, the Chinese Development Bank will provide funding and contract out construction work to companies including China Railway.
The Ghana deposit is not the only West African market where China has sought to expand its bauxite production. In 2016 Guinea surpassed Australia as the world’s leading producer of alumina, and in September 2017 the Chinese government agreed to a $20bn, 20-year loan to the country in return for bauxite concessions. Projects guaranteed by the loan include an alumina refinery to be built by China Power Investment and two bauxite mines to be developed in the northwest of the country by Alumina Corporation of China and China Henan International Cooperation.
Holding an estimated 960m tonnes of bauxite deposits, Ghana could be the next country on China’s radar. With the geological resources, the financing and the political will in place, the country could soon see a new major market emerge. “Come what may, we are going to bring those resources to play,” President Akufo-Addo told international media in March 2017. “We want to build economies that are self-reliant, have the capacity to compete and generate prosperity for our people.”
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