Ken Ofori-Atta, Finance Minister
The Agyapa Royalties agreement was a good initiative that was introduced by the government of Ghana, Chief Executive Officer (CEO) of Songhai Group, Mr Hene Aku Kwarpong who is based in the United States of America (USA), has said.
However, he noted that the government must build trust among the people of the country in order to get them to appreciate the benefit that it comes with.
“Agyapa is fine but how do we do it to generate trust?” he asked after joining a Monetization of Minerals Royalties Forum held the auditorium of the Institute of Statistical Social and Economic Research (ISSER of the University of Ghana, Monday, May 3, via zoom from his New York base.
The Agyapa deal received stiff opposition from civil society groups and the National Democratic Congress (NDC) after the critics said the deal was bad.
Following the public uproar, President Nana Addo Dankwa Akufo-Addo ordered that the deal be withdrawn from parliament for further works to be done on it.
The President said in his first state of the nation address in his second term that the Agyapa deal will be back to Parliament.
“Mr Speaker, let me, at this point, assure the House that, in the course of this session of Parliament, Government will come back to engage the House on the steps it intends to take on the future of the Agyapa transaction,” he said when he delivered the State of the Nation Address to Ghanaians in Parliament on Tuesday, March 9, 2021.
Touching on the news that Ghana has overtaken South Africa in gold production Mr Kwarpong noted that it is good news but this development has the propensity of rather creating problems for the West African nation.
He explained that the mining companies there actually doing well in Ghana thereby assisting the country to leapfrog South Africa, are all South African companies.
This means whatever proceeds or value they make in Ghana will be repatriated to their mother country.
He said at the forum that “Ghana is now the leading producer of gold, we have passed South Africa and other African countries which is great.
“The problem is that it is actually quite a bigger problem because the only reason why Ghana is the largest producer is that two big South African companies are doing more in Ghana. So, if you actually take the value that we get in Gold as a country, it is actually way down. So all we are doing is we are digging out the gold for others to then create value along the whole value chain all the way to the jury and the central bank.
“So we really should try to step away from the obsession and really understand that when it comes to it, we have almost about 1000 metric tonnes of gold in the ground. There are almost eight countries that have more than we do.
“So fifty years from now those eight countries including the US, Australia, Canada, and those guys are also the best group that have organized the biggest companies that are working in our own country. So it is almost as if somebody has left their larger resources to come to your country to take your stuff.
“So 50 years from now my biggest concern is if we do not take care we actually may not have the opportunity to even make money from gold, because others would have monetized it and they would have had still a lot of resources left-back in their country.”
Resource Global Network has reported that gold output in Ghana jumped by 12% in 2018 to 4.8 million ounces (Moz), eclipsing South Africa’s output of 4.2Moz for the first time and becoming Africa’s largest gold producer in the process.
South Africa’s gold sector has been in gradual decline for several years, with operators forced to dig deeper into maturing mines at escalating costs, while Ghana is benefitting from low-cost mines, friendlier policies, and new development projects.
The shifting location of Africa’s primary gold hub is best encapsulated by the likes of AngloGold Ashanti and Gold Fields – traditionally known as South African industry stalwarts – who have decided to move their focus to other countries, including Ghana.
In addition, Sibanye Gold – the largest remaining gold miner in South Africa – is cutting thousands of jobs and diversifying into platinum group metals (PGMs) in a bid to reduce costs.