GIADEC’s giant strides in developing an Integrated Aluminium Industry in Ghana

Ghana’s first President, Kwame Nkrumah, had the vision to industrialise Ghana’s economy and identified the Integrated Aluminium Industry (IAI) as a good starting point.

With an operating bauxite mine in Awaso and the establishment of the VALCO smelter by Kaiser Aluminium of the United States of America, the IAI dream was on its way to becoming a reality. The building of the Akosombo Dam, primarily to provide cheap and reliable power to VALCO with the excess energy to power other industrial projects, provided an impetus to Nkrumah’s industrialisation drive.

The vision was for the private investors to work towards establishing the full value chain of an Integrated Aluminium Industry in Ghana, which would ensure the mining of bauxite, refining bauxite into alumina and smelting of alumina into aluminium, all within Ghana.

Sadly, this vision never materialised, leaving Ghana with a bauxite mine in Awaso and the VALCO smelter in Tema, but the country still has no refinery. Currently, all bauxite mined in Awaso is exported, and the alumina component needed for VALCO’s smelter operation is imported.

President Akufo-Addo, with his vision of a ‘Ghana Beyond Aid’, identified industrialisation as a major pillar; with an Integrated Aluminium Industry as one of the strategic anchor industries to lead the industrialisation drive.

This vision of a ‘Ghana Beyond Aid’ subsequently birthed the Ghana Integrated Aluminium Development Corporation (GIADEC). GIADEC was established through an Act of Parliament – The Ghana Integrated Aluminium Development Corporation Act, 2018 (Act 976) assented to in August 2018 with a clear mandate to promote and develop an IAI in Ghana.

Empowered by its objects under Act 976, GIADEC holds and manages all of the Government of Ghana (GoG)’s current and future interests and investments in the IAI, which includes the entire value chain in the production of aluminium. GIADEC currently holds GoG’s one hundred per cent Volta Aluminium Company Limited (VALCO) and the twenty per cent minority stake in Ghana Bauxite Company Limited (GBC), respectively. Additionally, the prospecting rights to all of Ghana’s approximately nine hundred million metric tonnes of bauxite have been novated to GIADEC.

Through a series of engagements with Government of Ghana stakeholder organisations, GIADEC has developed an Outline Masterplan for Ghana’s IAI. The Masterplan underpins the execution of Ghana’s IAI. It defines the four key projects the Corporation is driving to develop the upstream part of the full value chain of the Integrated Aluminium Industry in Ghana. The Masterplan also highlights and identifies all the key components such as supporting infrastructure – railways, port facilities and power, as well as the allied industries and the regulatory, statutory, and environmental frameworks that will be vital to the successful implementation of Ghana’s IAI.

In September 2021, President Akufo-Addo launched all four (4) projects of the IAI and witnessed the signing ceremony between GIADEC and its strategic partner to execute Project 2, Rocksure International.

The four (4) key projects are together estimated to cost  $6 billion to implement. The projects are:

Project 1 – Expansion of existing mine at Awaso and building of a refinery

Project 2 – Development of a mine at Nyinahin-Mpasaaso and a refinery solution

Project 3 – Development of a mine at Kyebi, a second mine at Nyinahin-Mpasaaso, and building of a refinery

Project 4 – The modernisation and expansion of the VALCO smelter to improve efficiency and increase capacity

 

STATUS OF ALL 4 PROJECTS UNDER THE IAI

Project 1 – Expansion of existing mine at Awaso and building of a refinery.

The Awaso bauxite mine has been in operation for over 80 years. The mine is managed by Ghana Bauxite Company (GBC) which, until recently, was jointly owned by the Chinese mining company, Bosai Minerals Group Limited (Bosai), which held an 80% stake, and the Government of Ghana a 20% stake The Government of Ghana’s stake in GBC is now held by GIADEC. A Memorandum of Understanding (MOU) was signed between GIADEC and Bosai Minerals Group Limited to expand the Awaso mine and build a 1.6mm tonne alumina refinery. However, due to Bosai’s decision to pull out of the operations and exit the country, the execution of the Project is currently on hold.

Following Bosai’s exit, however, a Ghanaian Consortium, OPCL, has acquired the 80% shares in GBC which was held by Bosai, with GIADEC retaining its 20% holding.

GIADEC, in collaboration with the Government of Ghana and its new partner, OPCL, has worked to stabilise the existing operations at Awaso. GBC has since commenced mine expansion plans at the Subri Hill in their Awaso Concession with the support of GIADEC. The new outlook for GBC, in the short to medium term, is to ramp up production from 1million tonnes per annum to 2 million per annum.

Meanwhile, GIADEC is poised to reinitiate Project 1, and is currently assessing the capacity of OPCL to execute Project 1, which involves the expansion of the existing Awaso mine and the building of a refinery.

Project 2 – Development of a mine at Nyinahin-Mpasaaso and a refinery solution.

In September 2021, Rocksure International, a wholly owned Ghanaian Company, signed an agreement to partner with GIADEC to execute Project 2 under an eventual joint venture partnership arrangement.

Rocksure International Limited is currently on-site and has commenced drilling and Mineral Resource Estimation (MRE) works at Nyinahin Block B – The Prospecting work is expected to be concluded by the end of this year and will pave the way for the building of a mine (with a refinery solution) in the Nyinahin-Mpasaaso area.

The impact of the activities of the partner – Rocksure International have been visible in the community resulting in the creation of direct and indirect jobs (through supportive businesses) a situation which has boosted the local economy and offered renewed hope to the teeming youth.

Chief Executive Officer of GIADEC, Mr. Michael Ansah, on a recent visit to inspect the progress of work, was taken on a tour of the project site to observe the processes of collecting bauxite samples for testing at the laboratory. He was also introduced to state-of-the-art drilling machinery being used to conduct diamond drilling, which, according to the Project Geologist, will help obtain quality or core samples that will be analysed at the laboratory to check for alumina content.

Project 3 – Development of a mine at Kyebi, a second mine at Nyinahin-Mpasaaso, and building of a refinery.

GIADEC has finalised negotiations with a preferred strategic partner and is going through the necessary approval processes ahead of an imminent announcement.

An imperative, and essential part of developing Project 3 is the strict adherence to environmental planning standards and considerations, and to need to drive world class responsible mining standards. GIADEC will ensure that a Biodiversity Action Plan (BAP) is produced from the Baseline Biodiversity and Hydrology Studies that have been conducted by the Faculty of Natural Resources of the Kwame Nkrumah University of Science and Technology (KNUST), on behalf of the Environmental Protection Agency (EPA), in the Atewa Forest Range, which contains the Kyebi bauxite reserves, and together with all requisite regulatory agencies, ensure its implementation. This is part of efforts to ensure that our operations are within a sound and sustainable regulatory framework that will protect the vegetation, water bodies and wildlife.

A case is currently ongoing at the High Court of Ghana, between some civil society organisations, and individuals, against the Attorney General (the Government of Ghana (GoG)), with the former praying the court to restrain GoG from mining in the Atewa Forest.

Project 4 – The modernisation and expansion of the VALCO smelter to improve efficiency and increase capacity.

The VALCO smelter is currently running on two out of its five potlines and producing about 50,000 tonnes of primary aluminium per year, out of its installed capacity of 200,000 tonnes. The other 3 potlines have been shut down, and beyond repairs due to lack of maintenance and repairs over the years. VALCO has the capacity for direct employment of over 1,200 Ghanaians but currently employs 705 Ghanaians.

Following the establishment of GIADEC in 2018, and the consequent transfer of the Government of Ghana’s 100% holding to GIADEC, immediate steps were taken by GIADEC to establish the VALCO Board. The Board was duly inaugurated in August 2020.

A collaboration between GIADEC and VALCO, as part of VALCO’s recovery plan, secured an approval from government for an injection of funds into the Company’s operations in 2021, leading to the maintenance and repairs of its two (2) and only operating potlines. This completed the stabilisation phase of the Company.

GIADEC working closely with VALCO has recorded some modest gains over the period. VALCO for the first time in twelve (12) years, recorded a positive Earnings Before Interest, Tax, Depreciation & Amortisation (EBITDA) for the year 2021. The trend is expected to continue in 2022, and in the coming years, if the required investments are made.

The implementation of Project 4 – the modernisation and expansion of the VALCO smelter to improve efficiency and increase capacity, is to ensure that VALCO is positioned to sustainably grow and be profitable, and to contribute towards establishing and realising the linkages of the upstream and downstream components of the Masterplan for Ghana’s IAI. The mordenisation and retrofitting of the VALCO smelter will result in a new installed capacity of 300,000 tonnes that will be a major boost to realisation of the plan.

A well-capitalised VALCO, operating with modern technology, will ensure that the plant is more efficient, more productive, competitive, and can ultimately drive the transformation of the downstream sector of the IAI in Ghana.

The execution of Project 4 alone, will require significant investments in excess of USD 600 million. This will thus, require a strategic investor/partner with the financial capacity and technical know-how, to partner GIADEC to expand, retrofit and modernise the plant.

Ghana’s downstream sector remains underdeveloped using less than 7,000 tonnes of the about 50,000 tonnes of aluminium VALCO currently produces. With a forecast of about 300,000 metric tonnes of aluminium after VALCO has been retrofitted, GIADEC is working to revive and expand the downstream sector to take advantage of the excess aluminium that would be produced. This will ensure that we maximise in-country value by producing finished aluminium products to substitute imports and grow domestic market share in the Automotive, Electrical, Construction and Packaging sectors.

A thriving Downstream Aluminium Industry will be a vibrant industrial powerhouse made up of manufacturing companies creating thousands of jobs, including high paying jobs for the teeming youth.

Project 4 – the modernisation and expansion of VALCO is, therefore, key to achieving the vision for the downstream.

The Integrated Aluminium Industry is a ‘game changer’! It is at the heart of Ghana’s industrial transformation agenda. When fully implemented prioritised, it will lead to a transformation of Ghana’s economy, and massively turn-around the economic fortunes of Ghana. The IAI, alone, has the potential to create the hundreds of thousands of jobs across every level of the value chain and could be the panacea to Ghana’s unemployment woes, whilst improving Ghana’s GDP substantially.

The timing for developing Ghana’s IAI is right as the aluminium market, though volatile, is looking very favourable and is forecasted to even get better. There has been a rising demand in the use of aluminium significantly by about 54% in the last decade due to its lightweight, high strength, and recycling properties. This upward trend in production is likely to continue in the years to come along with the healthy pace of increase in the usage of aluminium. The development of the downstream will ensure we lock in value in Ghana while significantly boosting the economy.

The execution of all four (4) projects under the IAI masterplan are at various stages of implementation. The infrastructure underpinning the IAI i.e power, ports and harbour, railway and roads are equally being developed under the relevant agencies in tandem. This is a multi-year, multi-billion-dollar investment programme.

The vision of developing an IAI in Ghana is now clearly defined, and execution is on course. The integration of four (4) operating bauxite mines, two refineries, the VALCO smelter, and a vibrant downstream industry, accompanied by the supporting infrastructure i.e an expanded ports and harbour with increased capacity, railway and supporting network, and a low-cost and stable power supply, will be critical to success.

Since its establishment, GIADEC has been living up to its mandate of developing and promoting an Integrated Aluminium Industry, giving credence to President Akufo-Addo’s vision of a “Ghana Beyond Aid”.