Ghana: Gold Mining Resurgence

Ghana Map

Introduction

The theme of developing countries is important in the globalisation debate – they are often considered to be beneficiaries or victims, depending on one’s perspective, of global economic development fuelled by multinational corporations. Mineral resources are traditional sources of income in these countries that do not require a great deal of know-how to profit from its exploitation and export. In this case study, we will examine how the global imperative to seek rapid economic development measured by growth in Gross Domestic Product (GDP) via the extraction of valuable mineral resources has impacted the economy, the environment and social life in the developing West African state of Ghana.

Globalization

This is a complex phenomenon and can be viewed from different (disciplinary) perspectives. Our viewpoint: direct impact at the local level – on the quality of life in diverse parts of the world.

Volta view of the dam

The economy is the driving force of globalisation processes. However, the economy looks different from both a global and local perspective as a result of: on-going trade liberalisation and increasing opportunities for investment across national borders, the global production and distribution network that have become even more interconnected, their increased efficiency, and the lesser importance of boundaries and borders; the globalised economic driver to maximize profit but also deliver cheap goods to underdeveloped regions. However, from a local perspective, globalisation of economic processes might block local initiatives as it neglects local specifics – social, cultural and political conditions, and of course the traditional economy based on those same conditions. In the past, tariffs would have been imposed on imports in developing countries in order to nurture and incubate local industry and hence protect it from foreign competition, just as new industries had once been protected in developed societies, but the demands of the global economy and the World Trade Organization require opening up markets in developing nations to the full force of global competition. Globalisation in a certain sense means universalisation, and its economic imperatives destroy local diversity, which often means neglecting local consumption needs or patterns. Local people are perceived as part of the global “labour force” often working primarily toward the benefit of the wealthy “north” and absorbing their externalities – economic characteristics are important but traditional skills are no longer valued.

Kakum

Thus an economy which is a driving force for development in terms of GDP growth is not usually accompanied by cultural development, which is a local matter, but generates educated and motivated citizens to cope with its challenges. The global economic paradigm in which multinational corporations (MNCs) operate is thus an external “engine” for development – if it is “applied” where political, social and other conditions have not been prepared then local development could be substantially distorted. Some developing countries have experienced a so-called “Dutch Disease”, which is “the name applied to the phenomenon experienced by countries which have a rich endowment of minerals, the result of which is that the economy of the country becomes heavily reliant upon the revenues received from mineral sales, at the expense of the growth of other industries”. From the point of view of business, including mining companies, the following factors are important for the predictability of investment outcomes (and are also indicators of countries’ economic performance): international competitiveness; efficient bureaucracy; a good tax system; good training systems; a wide pool of human resources; exchange controls; labour productivity; government spending; levels of corruption; infrastructural development; economic stability; crime; political stability.

Volta lake

The Dutch Disease phenomenon has often been applied by economists and researchers to many individual cases on the African continent where 69% of countries rely on the mining industry as their largest sector; the mining exports of 13 of these countries comprise between 25% and 90% of annual export earnings. Related to this phenomenon, especially in association with the energy and mining sectors of mineral-rich developing countries, is the “enclave economy” or “enclave export model” thesis. This holds that a particular sector has more external (foreign) linkages than internal (domestic) linkages and where most inputs are imported and most exports are unprocessed. In the mining sector, for example, extracted ores do not contribute to the development of the economy other than to be sent abroad to generate foreign exchange. It is also often used to describe post-colonial dependency relations in the developing world. Some factors that contribute to Dutch Disease or an enclave economy are visible under the local circumstances of this case study. Ghana is rich in natural resources but has low technological capacity to develop its mining industry. Large mining companies can bring in the technological innovation needed but their operations should ideally be supported and controlled by national institutions. If these are not fully functional in terms of administrative capability and transparent governance, then there is the risk that the environmental and other consequences of mining activities may be considered “externalities” and therefore will not be adequately addressed by foreign companies. In some cases, the local economy may not have the capacity to absorb large amounts of income from mining activities, which may in turn fuel corruption. Moreover, if the legal framework that establishes the administrative and regulatory conditions in which foreign companies operate is weak or poorly enforced, then it creates an environment conducive not only to corruption, but also to penetration by actors involved in the “black” economy. What actually constitutes a black economy is a distinctly grey area in developing countries where survival and subsistence living obviously takes precedence over strict adherence to government-imposed regulations, but “illegal” economic activity can have far-reaching negative impacts on the natural environment when allowed to go unchecked. We will see an example of this in the Ghanaian gold mining sector where illegal and semi-illegal activity by small-scale miners has wrought considerable damage to both the local environment and human health. Ghana has gone through rapid economic development (based on the resurgence of its mining industry since 1989) that was based on liberalisation of the environment for private (foreign) investments. It has in particular been a beneficiary of a huge increase in the world price of gold in the last few decades. While production, for example, increased about 700% from 1980 to 2000, the gold price began surging soon after: it rose from approximately $300/oz. in early 2002 to over $1,900/oz. in September 2012. In 2009, gold accounted for 43% of Ghana’s exports. Mining’s share of GDP, of which gold represents 95%, was 5.8% that same year, which is higher than Ghana’s other chief export commodities, cocoa (3.9%) and forestry (3.2%). Staying in 2009, Ghana was the world’s ninth largest producer of gold (3.8% of global production). By 2012, Ghana had climbed the production rankings to number 8, with an output of 96.8 tonnes, with total revenue from gold at over US$5.3 billion.

On the face of it, there have been very clear fiscal benefits to Ghana from the mining of gold. However, despite the rapid growth in gold exports and a concomitant growth in GDP, there have also been considerable social costs associated with this development (growing conflicts with local mining communities), as well as huge environmental costs (read , pp. 3-4). But before we look more closely at what these individual costs have been, we need to understand the various stages in the development of the Ghanaian mining sector and especially how it has experienced a major resurgence in recent years.

Ghana & mining

Ghana’s history is very closely connected with mining – from ancient times to the colonial period up to the present day when economic transformation (and income) is largely based on the mining industry. Ghana’s official name until its independence in 1957 was the Gold Coast, reflecting the fact that gold was the most important and widespread mineral resource, with large-scale industrial mining for the mineral dating back to the last quarter of the 19th century. It is currently the second biggest producer of gold on the African continent after South Africa. Gold was displaced in importance by bauxite and manganese only in the last century. Many wars for control over its gold deposits occurred throughout its history, followed by economic struggle in more recent times – gold remains one of the country’s most important exports. Actually, there have been several periods in the mining history of Ghana. First, it is a part of the country’s tradition: indigenous people used gold even in pre-Christian times. As a result, Ghanaians often prefer to work in small mines rather than be employed with some big company. But from 1933 these small miners were banned because of a Mercury Law which made the use of mercury for mining illegal (mercury is used to bond with gold in order to facilitate easier extraction from gravels and crushed rock). Small scale gold mining based on this rather outdated and dangerous technology was criminalised up until 1989 (when the Small-Scale Mining Law was enacted). In the colonial period, large scale mining activities were undertaken by foreign, especially British investors (Ghana was a British colony). The period of independence was characterised by nationalisation of resources and the creation of state enterprises (e.g. the State Gold Mining Corporation (SGMC)) – state control lasted from 1957–1986 and ensured government revenues, employability and the control of resources. However, there was little investment and exploration of new resources. Ill-considered macroeconomic policies, such as an overvalued exchange rate, reduced the amount of money available to maintain and retool the mining industry. This in turn led to undercapitalisation and low efficiency because of poor management and less than robust mining skills. As a result, gold extraction decreased from 915,317 ounces in 1960 to an historic low of 287,124 ounces in 1986. After 1986, when mining sector reforms were initiated (as a part of the macro-economic policy reforms of the Economic Recovery Programme (ERP) sponsored by the International Monetary Fund), an emphasis was placed on shifting away from state ownership of the sector to liberalisation, deregulation and privatisation, leading to considerable technological development accompanied by exploration. The National Mineral Policy of 1986 revised several mining policies, including a reduction in state royalty taxes on extracted gold and a relatively low corporate tax of 35%. Extensive policy changes were passed to attract foreign investments that included “a conducive policy, legislative and administrative frame work more conducive to business, and a thorough privatization programme”.(p.14). These policy changes caused a shift in perception of the investment environment by investors and Ghana was recognized as one of the better countries in Africa for its attractive geological and investment environment. (See ); (Read , pp. 7-16). Foreign direct investment greatly increased and gold production quickly overtook the peak production year of 1960. By 1994, gold exports produced 45% of total export earnings and overtook cocoa, which until then had been the leading export commodity.

Small-scale mining gains a new lease on life

The Ghanian gold mining industry underwent a minor revolution in 1989 with the regularisation of small-scale mining operators, which created a legal framework for the registration of small-scale gold mines (and diamond mines), mineral production and sales of mineral output. This new framework consisted of three laws: the Small-Scale Mining Law, the Mercury Law, and the Precious Minerals Marketing Corporation (PMMC) Law. The Small-Scale Mining Law established the Small-Scale Mining Project within the Ghana Minerals Commission to provide technical assistance for prospective and registered small-scale miners and promote their activities. The Mercury Law legalised the purchase of mercury from authorised dealers for gold extraction purposes, while the PMMC law established a body to buy and sell gold (and diamonds). It operates gold purchasing offices in the big cities and licenses buy agents and sub-agents to buy gold on its behalf in the country’s gold mining regions. In addition, buying licenses were also granted to two privately owned companies to inject some competition into the gold purchasing sector.

Since the establishment of this legal framework, two forms of small-scale gold miners (also known as Artisanal and Small-Scale Miners or ASM) have emerged – legal miners who have acquired their mining licences from the Minerals Commission of Ghana, and illegal miners who operate without a requisite licence and often operate on concessions held by other companies. These illegal operators are known as “galamsey”, which is a corruption of “gather them (the gold) and sell”. It is estimated that the ASM sector accounted for 12% of total gold production and 89% of diamond production from 2000 to 2008.

ASM usually operate in the gold-bearing areas of Ghana where there are rich deposits, but which are too small for large companies to justify their investment in the infrastructure and equipment required. These small-scale operators are better suited to such conditions with their very low overheads and rudimentary equipment that ensure production costs are kept to a minimum, and which in turn makes them relatively impervious to fluctuations in the world price for gold.

ASM are not allowed to work the concessions held by large-scale miners. However, some galamsey encroach on such concessions, which leads to conflicts between the two sides. This has sometimes been successfully resolved by large mining company management taking the step to officially recognise the activities of small-scale operators on their concessions by ceding portions of land where the reserves are too few to be economically extracted on a large scale.

The rapid shift from diamond to gold mining by small-scale miners in 2006

In the latter half of the 2000s a very rapid and dramatic change occurred in ASM as a result of two factors. First, after reaching peak diamond production of 2.5 million carats in 1972, the state-owned Ghana Consolidated Diamonds (GCD) company gradually went into permanent decline, which resulted in the conversion of many of the country’s artisanal “tributary” diamond miners who worked GCD’s ‘sub-economic’ areas to gold mining. Previously, after the government had legalised ASM activities in 1989, it was not able to entirely stamp out illegal small-scale mining, but GCD tried to contain this activity by supervising “tributor” mining, which allowed company-registered small-scale diamond miners to increase their production from the less economic areas of GCD’s concessions. Over time, however, GCD was unable to control and manage these small-scale operations as more illegal artisanal miners than it could keep track of poured into the company’s concession areas. Once large-scale diamond mining shut down when GCD ceased to operate in September 2007, ASM were left with few alternatives and used their skills to convert from diamond to gold mining instead. Such a conversion was not difficult to achieve since gold had always been recovered as a by-product of alluvial diamond mining, hence former diamond miners were able to use their knowledge of handling and selling gold to facilitate their shift in focus. Second, international guilt and concerns about the sale of “conflict” or “blood” diamonds originating from the Ivory Coast, but smuggled onto world markets through Ghana, led in late-2006 to the imposition of a temporary ban on Ghanaian exports of rough diamonds. This was followed by the introduction of stricter production and export regulations through the international Kimberley Process Certification Scheme (KPCS) that had a debilitatingly negative effect by very suddenly increasing the cost of working in the diamond industry and hence creating an incentive for artisanal miners to move to gold. Other accompanying factors essentially encouraged this transition, including favourable geological terrain that contains both diamonds and gold within a limited spatial area, the growth of informal partnerships between customary land owners and illegal artisanal miners after the former re-acquired or re-occupied land previously signed over to GCD, the volatility in the price of diamonds (from US$32 per carat in 2005-2008 to US$20 per carat in 2008) and the soaring price of gold (US$445 per ounce in 2005 compared to US$1224 in 2010), the rising operational costs of diamond mining due to new regulations imposed by government, and the paucity of opportunities in other types and sectors of employment. “As a result, artisanal miners have triggered a set of self-sustaining forces that have permanently transformed the political economy of mining in the country” (p.164). The effect of this change of focus away from diamond mining to gold mining can be seen in the rapid shift in the ratio of workers in both industries: in mid-2008 it was approximately 55-45 in favour of gold mining, although it stabilised at 50-50 once world diamond prices recovered slightly and government restrictions were loosened, but this represents a phenomenal change from the 1990s when the ratio favoured diamond mining at 95-5, and even more recently in the mid-2000s when the ratio was still 80-20 in favour of diamonds.

The impact of the resurgence in gold mining

Loss of farmland and forest cover

Despite the undoubted fiscal benefits of increased gold mining activity since 1989, much of this has been achieved at considerable environment and social cost. The institution of the new IMF-inspired policy regime in the mining sector, for example, was not accompanied by any environmental regulations until 1994. Since that time, legislation mandating environmental assessment impacts and environment management plans has been passed, but in reality these laws are not strictly policed due to a lack of resources. The technology applied to the gold mining sector also changed at the same time as the more easily extractable mineral deposits began to run out. Gold mining has gradually shifted from underground to surface mining resulting in considerable environmental damage from deforestation and the loss of farmland within mining concessions. The loss of farmland is especially relevant to this case study, as it has wide-ranging spill-over effects by forcing farmers to expand their farmland into forests and brings them into direct and often violent conflict with mining interests over land use rights. In one study of land use in mining concession areas in Western Ghana by Schueler, Kuemmerle and Schroder, it was found that 45% of farmland and 58% of forest cover had been lost, respectively, as a result of surface gold mining. Interviews with farmers and other local stakeholders suggested a widespread loss of ecosystem services and environmental degradation “together pointing to rapidly eroding livelihood foundations. Since we found substantial indirect effects of surface mining (via displacement of farming), the environmental and social costs of Ghana’s gold boom may be much higher than the often acknowledged direct costs”(p.537). Akpalu and Parks look at the same issue of land use from an economic perspective by analysing the resource conflict arising from the interaction of non-renewable and renewable source use, i.e. the opportunity cost of mining in Ghana’s rainforest regions. The surface mining technologies generally favoured by large mining companies to extract gold located in rainforests have led to deforestation rates of approximately 2 million acres; over 60% of the rainforest in the Wassa West District, for example, was lost to gold mining operations by 2001. Surface gold mining is thought to be mainly responsible for the reduction in the country’s rainforest coverage to only 12% of its original total coverage. The non-mining benefits of Ghanaian rain forests are extensive. For example, it is thought that about 75% of protein in West Africa comes from bush meat, i.e. animals tracked and killed in forests. It has been estimated that 300,000 people in rural areas are supported by the bush meat trade, of which 270,000 are independent hunters. The annual harvest is thought to be about 385,000 tons, worth in the vicinity of $350 million. Ghanaian rain forests are also sources of traditional medicines derived from about 2,000 plants used by roughly 70% of native Ghanaians for their healthcare and also exported to Europe for production of medicines there. In addition, a large number of forest products are as the basic material in the production of baskets, furniture, roofing materials, musical instruments, jewellery, hunting tools, and traditional drums, etc. Major waterways that provide the main source of drinking water to the country’s population are fed by rivers and streams that pass through forest reserves. Finally, Ghanian forests are home to many rare species of flora and fauna, which are gradually being reduced in size because of the destruction caused by open cast gold mining operations. For example, ten species of timber are of concern to the International Union for Conservation of Nature and Natural Resources. These are not issues, however, that are taken into account when mining concessions are granted. In Ghana, a minimum tax of 3 per cent is usually imposed on mining companies to compensate for the opportunity cost of the extracted gold resulting from the preference for open-pit or surface mining methods in rainforests. As Akpalu and Parks have pointed out, however, such a level of tax “is too low to fully represent the external cost of extraction (i.e. lost forest products)” (p.69), and is therefore unlikely to compensate for the damage inflicted on forests or led to greater efforts to protect renewable forest resources.

The conflict between large-scale and small-scale mining

Related to the land use issue is that of burgeoning conflict between different types of users. Large-scale mineral exploration companies remain the primary players in both the diamond and gold mining industries, but their relationship with ASM has become more fraught as the latter have a acquired a greater taste for gold mining and have consequently begun encroaching more and more upon large-scale concession holdings. These encroachments have begun to exceed the government’s and the companies’ capacity to control them, with the potential for greater confrontation and possible violent clashes in future. According to the Ghana Chamber of Mines, illegal mining has become a major environmental, health, safety and security problem. The economic ramifications are also potentially damaging to the country, particularly when illegal mining takes place on the concessions of large companies. Without proper oversight and regulation, these small-scale illegal miners leave behind them polluted waterways, craters filled with toxic waste material (from technologically backward gold extraction methods that rely greatly on mercury), and general destruction of surrounding flora and fauna. The cost to the Ghanaian state of having to treat previously pristine water sources in order to make them potable would be considerable. And in the opinion of the Chamber of Mines, which has a clear vested interest in reducing competition, “the difference small-scale mining operations and illegal mining is not distinct” (p.17). Moreover, they both contribute minimally to the nation’s coffers (read: they pay little in the way of tax), while producing more than a third of the country’s gold output.

The use of mercury in gold mining

There has been a large increase in the use of mercury as extraction has shifted from alluvial mining to surface mining. Previously, most ASM gold mining accompanied diamond mining as a side activity where gold could be relatively easily sifted from the diamond-bearing gravels in or near streams and in alluvial terraces. Because of the shift in focus to gold, mining has also moved away from the depleted surface layers of river beds and streams to harder to mine areas where mercury is used in large amounts to combine with the gold particles embedded in rock and soil. The mercury-gold amalgam is then heated by the miners, usually in very rudimentary conditions, to remove excess material so that only gold ingots are left over. Thus a much larger market for mercury for created from greater numbers of miners processing rock with the use of mechanised extraction equipment. The clear downside of this is the poisonous vapours released during the heating process, which often come into contact with the skin and mouth and are even inhaled by the miners themselves with long-term implications for their health. Not only that, waste mercury is usually left to run off into nearby waterways or the local soils with a highly detrimental effect on the environment. A study of the health effects of mercury use in a galamsey village found that 90% of villagers (both galamsey and non-galamsey) reported experiencing a slight metallic taste and salivation problems. Twenty percent also experience physical tremors and 65% has sleep disorders. Analysis of mercury levels in biological samples indicated 86-91% of the population had been exposed to mercury. A second similar study in a different region of Ghana that looked at the effect of mercury use on overall river systems found that: river sediments were significantly contaminated and were carried so far downstream that some coastal areas were just as contaminated at inland areas; fish are also highly affected so that in the particular area examined the consumption of a mere 45g of fish per day was sufficient to exceed the World Health Organisation’s (WHO) weekly tolerance of 300 µg; and consumption of particular types of vegetables could exceed the weekly mercury intake set by the WHO/Food and Agricultural Organisation’s expert committee.

There was a push in the early 2000s to encourage the purchase of “retorts” among ASM which are used for the separation of gold and amalgam to reduce the negative effects of mercury use on miners and others within the immediate vicinity of their workings, but it appears that the education campaign was not able to maintain pace with the huge boom in mining experienced since the middle of the decade.

Alteration of the physical environment

Even without the use of mercury, the effect of alluvial extraction methods by artisanal miners can be devastating by disturbing the physical characteristics of the environment. Miners are not particularly concerned about water discharge and simply deal with flow as they require for the immediate purposes of their mining activities. They dig pits in or alongside river beds in which they need just enough water for washing the gold (and diamond) bearing gravels. Habitats for aquatic life are therefore greatly disturbed and thus food availability is limited because excavation pits destroy the vegetation cover and aquatic macrophytes, which reduces the amounts of organic matter available to invertebrates and omnivorous fish. Environmental damage has been exacerbated beyond alluvial mining areas by the expansion of ASM gold mining outside easily accessible diamond-bearing gravels in the proximity of streams. “[M]iners have now moved several kilometres outwards from the low-lying diamond-bearing areas to weathered and primary host rock gold-bearing material in comparatively higher ground”(p.168).

How artisanal miners extract gold
In a typical small-scale gold mining operation where hard rock is mined, the ore is excavated manually and size reduction is
carried out using a combination of jaw and rocker crushers, hammer, disc and stamp mills. The stamp mills and rockers are 

manually operated while the others are powered by diesel or electricity. Generally, the milled material is washed in a sluice lined with corduroy, jute material, miner’s moss or astro turf to obstruct the flow of slurry and concentrate gold particles. Alluvial ores do not go through comminution [the reduction of solid materials to smaller sizes] but are scrubbed, screened and concentrated by sluicing. The concentrate in both cases is cleaned in pans and the gold is amalgamated with mercury. The amalgam is then roasted to obtain the gold, which is sold to licensed buyer. (p.133).

During the days GCD was the leading diamond miner in Ghana it created a 30-metre buffer zone alongside stream channels where mining was prohibited. This was a deliberate strategy to prevent environmental degradation and pollution. With the demise of GCD, artisanal miners felt free to begin mining these areas, leading to increased siltation of waterways, and to divert lengthy sections of stream channels. Such behaviour resulted in the complete diversion, for example, of the Birim River in the Akwatia area of Ghana, and in combination with deforestation and siltation also caused by small-scale miners, it has led to wholescale flooding during the annual rainy season, including loss of life and large-scale displacement of local peoples.

Weakening of the Kimberly Process

The shift in mining activities has also seriously undermined the Kimberly Process. Intended to block the flow of conflict diamonds from the Ivory Coast for purposes of re-export as Ghanaian diamonds, government authorities swiftly strengthened the diamond registration regime in Ghana to include personal examination and digital photographing as a means of “foot-printing” rough diamonds. A temporary ban was even placed on the export of all Ghanaian diamonds from November 2006 to January 2007 while the new procedures were implemented. Once the ban was lifted Ghanaian authorities made great progress in the registration of diamond mining participants, monitoring the diamond trade, and generally raising KPCS awareness among miners and traders. However, the demise of GCD and the reduction in diamond mining in general – resulting in part from the relatively new stringent registration measures – effectively made it more difficult to monitor diamond mining activities. Either artisanal miners moved to new (often illegal) mining sites, or they shifted their focus to gold mining instead. In sum, the well-intentioned KPCS process created a number of perverse incentives that both undermined the legitimate diamond mining sector and helped trigger a sudden upswing in gold mining with all its attendant environmental hazards.

Effect on local communities

The temporary ban on diamond exports and its immediate aftermath also placed severe strain on local communities previously reliant on income from small-scale diamond mining. The limited economic alternatives, such as farming, were seen as far too unremunerative and insecure, and so a shift to gold mining provided an immediate opportunity to maintain a livelihood. In contrast to the land use impact study undertaken by Schueler, Kuemmerle and Schroder, Nyame and Grant identify a number of positive features to artisanal goldmining. “[L]ocal economic growth steadily picked up to such an extent that many people were of the opinion that artisanal mining offered far more direct benefits to both the people and local communities than the large-scale mining of GCD”(p.169). The perception within such local communities in the Akwatia region, for example, is that combinations of small-scale diamond and gold mining are actually of greater economic benefit than large-scale mining and create more employment opportunities. The shift to a greater concentration on gold mining is hence viewed positively by mining sector participants and their dependents. Another possible benefit ensuing from the shift toward gold mining, according to Nyame and Grant is that it arrested the net outflow of workers and their families from the country’s diamond mining regions. The closure of GCD triggered a serious out-flow of migrants from the regions where it operated, which negatively affected social and economic activities in those areas. But as we noted above, as one opportunity was closed off, another one opened up as from GCD miners and others used their skills from the diamond mining trade to transform themselves into artisanal diamond and gold miners and moved into the concessions vacated by GCD. The surge in small-scale operations also prompted like-minded gold mining opportunists from other parts of the country to migrant to those same areas, as well as transnational migrants from other countries like Burkina Faso, the Ivory Coast, Guinea, Angola, and Mali. This increase in inward migration “more than compensated for the emigration of persons and loss of related economic activity that followed GCD’s demise”(p.169).

Awankwah and Anim-Sackey concur that working small-scale mines has a dramatic socio-economic impact on the individuals involved, providing full- and part-time jobs and often their only source of income. It rural areas it has reduced the exodus from the countryside to the cities, encouraged local economic development and assisted in poverty reduction. Moreover, it has helped people develop basic skills and hence transformed unskilled labour into semi-skilled and skilled labour, and it has offered chances for indigenous entrepreneurs to evolve. In 2003, it was estimated that around 100,000 people worked in the small-scale gold and diamond mining sector legally, while about the same number worked without legal status.

This issue of mining sector labour skills is currently of great relevance given that the start-up of commercial oil drilling in Ghana in recent years has placed huge pressure on the country’s stocks of skilled labour as competition has increased dramatically in the extractives sector. The Ghana Chamber of Mines is particularly concerned that there is an increasing overall demand for skills in the industry in order to take advantage of the higher price for gold as previously marginal mining areas have become more “economic” to work. The Chamber of Mines also highlights the significant proportion of the mining population with the requisite skills that is at or nearing retirement age.

Is Ghana an enclave economy?

Although the influence of the mining sector on the Ghanaian economy is often cited as a classic example of a “resource curse” or “enclave economy” (e.g.), Bloch and Owusu dispute this thesis. They believe that a sustained period of growth and strong investment, gold mining is more deeply linked to the Ghanaian economy than previously understood that can be further strengthened in future. Although “forward linkages” are weak because of a lack of ore processing capability and poor local demand for gold jewellery, fiscal linkages are becoming stronger, with the gold mining sector contributing 20% to government revenue in 2009 – up from 14% the previous decade – through royalties and various taxes. Consumption linkages are also expanding as incomes from increased mining activities flow through mining communities. But it is backwards linkages that are increasing most with the emergence of “a mining inputs cluster of firms supplying and servicing both producing and exploration mining companies across the country’s various mining communities”(p.441).

Conclusion

The globalising influences on the Ghanaian economy in the form of increased global demand and consumption of gold and heavy investment in the mining sector to feed that demand clearly have a range of impacts on the economic, environmental and social life of the country and involve an array of stakeholders. In economic terms, the boom in gold mining in recent years has contributed greatly to overall economic health and GDP growth through increased foreign investment, greater production and higher gold prices. Whether that has assisted in diversifying the Ghanaian economy and creating a more sustainable outlook in the years ahead remains debatable. Ghana has all the hallmarks of an enclave economy, but further research may bear out Bloch and Owusu’s thesis that the mining sector is showing real signs of developing deeper and wider linkages to the rest of the economy.

Evidence of environmental damage stemming from expanded mining activities is much clearer and the trade-offs in terms of destruction of renewable forestry and fishery resources and eco-systems do not appear worth it in the long run. Loss of forest cover and farmland has been considerable and has reduced traditional livelihood opportunities in the vicinity of mine workings. Both human health and the physical environment are negatively affected by the use of toxins in the artisanal gold extraction process, while the method of digging for gold seriously disrupts waterways and results in the loss of habitat for aquatic life. As the same time, artisanal miners, farmers, traditional landowners and large mining concerns are increasingly at loggerheads over land use rights.

On the other hand, there is some evidence that gold mining, particularly in the case of the renewed boom in small-scale mining, appears to have brought some benefits to local communities in the form of increased income flows, the establishment of mining service industries and the creation of job opportunities.

Case study – different viewpoints, interests

Assignment: in this case study, you have to “role play” different interest groups
– and find relevant arguments to support your positions.

Here are requirements for your assignment: Scope and Structure of Your Text. You might work directly in this wiki, just follow the link to your interest group. For editing, just follow the technical help link.

The interest groups are as follows:

The mining industry

…is the traditional source of income in developing countries – and has changed considerably under process of Globalization…

The mining industry interest group should explore following topics and information sources:

Needs:

The mining industry is greatly dependent on the factors mentioned above (social, institutional, political – creating a predictable environment), and also other infrastructure (technical and other facilities – transport, …)

Responsibility

How do they cope with social and environmental challenges – as expressed by Corporate Social Responsibility (CSR)?

Sources of information:

• Heledd Jenkins and Louise Obara: Corporate Social Responsibility (CSR) in the mining industry – the risk of community dependency. Available from www.crrconference.org/downloads/2006jenkinsobara.pdf
• Gordon, K., Pestre, F., & Oppenheimer, N. (2002). Moving towards healthier governance in host countries: the contribution of extractive industries. OECD Global Forum on International Investment Foreign Direct Investment and the Environment: Lessons from the Mining Sector (s 195). Available from http://www.oecd.org/dataoecd/62/54/2066545.pdf

Government & international organizations

Government & international organizations interest group might work with following ideas and information sources:

Needs: government should ensure economic growth but also all the long-term cultural development (etc.) of the country.

Its responsibility: sustainability in all aspects of development and local living standards.

Sources of information:

• Ghana Mining Portal Available from http://www.ghana-mining.org/ghanaims/
• Towards sustainable development in Ghana. Available from http://www.un-ngls.org/orf/documents/publications.en/voices.africa/number6/vfa6.03.htm
• Gordon, K., Pestre, F., & Oppenheimer, N. (2002). Moving towards healthier governance in host countries: the contribution of extractive industries. OECD Global Forum on International Investment Foreign Direct Investment and the Environment: Lessons from the Mining Sector (s 195). Available from http://www.oecd.org/dataoecd/62/54/2066545.pdf

Civil society

Are civil society representatives really a partner for dialogue about long term visions?

Sources of information:

• “The need for binding standards to regulate surface mining in Ghana- by Daniel Owusu-Koranteng - executive director of the WASSA association of communities affected by mining (WACAM)” – try a Google search
• The Centre For Business Relationships, Accountability, Sustainability and Society WORKING PAPER SERIES No. 36 Land Use Disputes in Ghana’s Mining Communities: Developing Sustainable Strategies Louise Obara and Heledd. Available from http://www.brass.cf.ac.uk/uploads/Final_Ghana_Mining_land_Use_Disputes_Working_Paper.pdf
• News from Ghana Mining Portal Available from e.g. http://www.ghana-mining.org/ghanaims/SectorNews/NewsArchivesSEP2011/tabid/233/Default.aspx
• Ghana’s NGO:
  • http://www.ghanaweb.com/GhanaHomePage/directory/cat32.html
  • http://www.plightofthechild.org/
  • http://circle.winrock.org/ngo/gh/EPAG.cfm
  • http://www.namart.50megs.com/GEF/EnvironNGOs.htm

Research

How could research institutions and researchers themselves contribute to the sustainable development of the region? What kind of information is needed:

Sources of information:

• Mining, Minerals and Sustainable Development (MMSD) project & Global Mining Initiative. Available from http://www.iied.org/sustainable-markets/key-issues/business-and-sustainable-development/mmsd-introduction
• Toward best practice: corporate trends in environmental management — “A preliminary conclusion of MERN research is that technical change, stimulated by the drive for improved competitiveness and the environmental imperative, is reducing both production and environmental costs, to the advantage of those companies that have the resources and capacity to innovate.“ Alyson Warhurst (ed) Mining and the Environment Case Studies from the Americas. Available from http://web.idrc.ca/en/ev-9341-201-1-DO_TOPIC.html
• Comparison with South Africa: Mining, Minerals and Economic Development and the Transition to Sustainable Development in Southern Africa, Available from http://pubs.iied.org/pdfs/G00603.pdf,
• Comparison with Niger: Globalization (2008) Globalization and the challenge for Nigeria’s Development in the 21st Century. Available from http://globalization.icaap.org/content/v7.1/Akinboye.html
• Illegal mining in Ghana Aljazeera three-part documentary. First part 12m01s

Conclusion

Globalization in world politics – restructured power. National governments should have the capacity to face pressures from MNCs: especially legislative capacity to prevent environmental damage (not regulated pollution aspects). There should be relevant institutional support for dealing with the problems generated. Any other “discovered” by us?

References

This page was created with support of the OP VK CZ.1.07/2.4.00/17.0130 Project - Interdisciplinary Sustainable Development Network