How galamsey threatens gold value addition efforts

On Wednesday, October 5, this year, I had the opportunity to participate in two meetings in Kumasi on the phenomenon of illegal artisanal (small-scale) mining, popularly known as galamsey.

These meetings were convened at the request of President Nana Addo Dankwa Akufo-Addo. The first was with the National House of Chiefs and the second was with 90 selected municipal and district chief executives from the mining districts in the country.

For me, the meetings were a demonstration of the President’s unwavering commitment to the fight against galamsey. Certain key decisions were taken which I believe will give the government an upper hand in the fight.

 

The President, while recognizing the contribution of small-scale mining to the economy, reiterated his position that he and his government were not against the economic activity of small-scale mining. What he detests is illegal and irresponsible small-scale mining.

The fight against illegal, destructive, and unsustainable small-scale mining has been approached in two ways. First, by regulatory enforcement where security operations bust perpetrators who are prosecuted under the enhanced sanctions regime.

 

The second is the reformative approach, which includes initiatives such as the community mining scheme, the provision of mercury-free ore processing machines (gold kacha), the responsible small-scale mining awards, decentralization and digitalization of the licensing regime for small-scale miners.

 

While the government continues to wage this war against galamsey, some unscrupulous elements in society continue to rape our environment and water bodies. Perhaps what is lost on these people is that soon the gold they extract from the ground illegally and irresponsibly, may very well be blacklisted.

In other words, if galamsey continues, gold from Ghana is likely to be rejected by the global consuming community. This is because it will be classified as not meeting responsibly sourcing standards.

 

Responsible sourcing of gold

Responsible sourcing of minerals such as gold is simply the process and practice of procuring gold ore in a way that respects human rights, protects human and environmental health, and devoid of forced labor, child labor, human trafficking, and slavery.

As a gold-producing country, responsible sourcing is crucial for Ghana if the country is to obtain full value for its precious mineral.

The OECD Due Diligence Guidelines on Responsible Sourcing of Minerals provides a comprehensive framework for achieving this.

This framework is generally accepted by industry stakeholders as a global standard for the responsible sourcing of minerals such as gold.

 

Galamsey’s threat

When gold ore is processed it provides higher value and this is termed value addition. Adding value to gold, therefore, includes refining the ore, producing jewelry, and minting of coins. It is estimated that value-added gold can fetch multiple times the value of unrefined gold.

Gold value is given by its weight and purity. Ghana’s gold ore (unrefined gold) usually comes at a purity of up to 23 carats.

The value of one kilogram (kg) gold ore of 23 carats at today’s London Metal Exchange (LME) spot price is $53,074.56, while the same weight of gold at 24 carats is $55,382.15. This gives a difference in value of $2,307 on 1kg.

 

Therefore, for 1,000kg, the loss in value will be $2,307,000. As of the end of last month, the total gold exports from both small-scale and large-scale was in excess of 94 tonnes at a value in excess of $4.8 billion, with the small-scale sector contributing about 17 per cent to this figure.

If the gold ore had been refined before export, it would have earned the country much more in value.

 

 

Refinery

The government has actively promoted value addition to gold as well as other minerals such as bauxite. One of the fruits of the proactive endeavor is the establishment of a gold refinery in which the government, through the Precious Minerals Marketing Company (PMMC), has an equity stake.

The construction of the gold refinery, which started in 2018, is now complete. It has a daily capacity of 400kg and enables the country to refine to 24 carats and 99.99 percent purity, the same quality as a good delivery bar.

With the refinery, the government is also taking the extra step to obtain international certification to maximize value for the refined products.

One such key international certification is the London Bullion Market Association (LBMA) Good Delivery Bar Certification, the efforts being led jointly by the Ministry of Lands and Natural Resources and the Ministry of Finance.

 

Necessary condition

However, to obtain the LBMA certification, it is required that the refinery, among other things, operates at a throughput of 10 tonnes of gold per year for a minimum of three years.

It is imperative that the gold which is fed the refinery is marked as sourced responsibly. Responsibly sourced gold, that is gold extracted legally, with due regard to the environment and devoid of conflict, human rights abuse and/or child labour.

This is how the current phenomenon of galamsey poses a big threat to the value addition efforts by the government.

It has the real potential to taint the gold ore which will be fed the refinery, thereby making it extremely difficult to meet the responsible sourcing requirements, and by extension, the output capacity.

Furthermore, galamsey has the potential to affect the jewellery industry. Some of the products of refinery will go to serve as raw materials for jewellers within the local jewellery industry.

If the gold is tainted as a result of galamsey, then what it means is that the jewellery will equally be tainted.

This will thwart all efforts by the government to promote the jewellery industry by seeking new international markets.

 

Imperative

It is for these reasons that it is extremely imperative that all support the fight against galamsey.

Even for those actively engaged in this wanton rape of our environment in search of the mineral, it is time for them to rethink and reform, otherwise whatever gold they manage to extract will have to be disposed of on the black market, which will fetch them a lesser value.

The writer is the Managing Director of the Precious Minerals Marketing Company (PMMC).