Ghana: Gold Mining Resurgence

Ghana Map

Introduction

The theme of developing countries is important in the globalization debate – they are often considered to be witnesses to global economic development fuelled by multinational corporations. Mineral resources are traditional sources of income in these countries not requiring great input of know-how to profit from its export.

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

Economy – the driving force of globalization processes. However, the economy looks different from the global and local perspective: due to on-going trade liberalisation and increasing opportunities for investment across national borders, the global production and distribution network have become even more interconnected, their efficiency has increased, and they no longer take heed of boundaries and borders; the globalised economic maximizes its profit but also brings cheap goods to underdeveloped regions. However, from the local perspective, globalization 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. Globalization in a certain sense means universalization, and its economic imperatives destroy local diversity which often means neglecting local consumption needs or patterns. Local people are perceived as the “labour force” – economic characteristics are important but traditional skills are not valued any more.

Kakum

So, 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 generating 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 the so-called “Dutch Disease” which is “a 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 businesses, including mining companies, these factors are important for the predictability of investments (and are also indicators of countries’ performance): international competitiveness; efficient bureaucracy; a good tax system; training of people; a wide pool of human resources; exchange controls; labour productivity; government spending; level of corruption; infrastructural development; economic stability; crime; political stability.

Volta lake

This is visible under the local circumstances of the 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 .

Ghana has gone through rapid economic development (based on the resurgence of its mining industry since 1989) that was based on liberalization of the environment for private (foreign) investments. However, the benefit for the country was quite negative, as it has led to not only considerable social costs (growing conflicts with local mining communities) but also huge environmental costs. (Read , pp. 3-4)

Ghana & mining

Ghana is a beautiful country of West Africa with a tropical climate and wonderful national parks protecting its environmental heritage.

Learn more from And visit Google Earth (Google Earth – UNEP Atlas) to see the local context as well as UNEP Atlas of Environmental Hotspots to have an idea of main issues .

Ghana’s history is very closely connected with mining – from ancient times to the colonization period until 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 most important and widespread mineral resource, replaced by bauxite and manganese only in the last century. Many wars for gaining control over the gold resources occurred throughout its history, followed by an economic struggle in recent times – gold is still one of the most important exports.

Actually, there were 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. Due to this fact, Ghanaians prefer to work in their small mines rather than be employed with some big company. But from 1933 these small miners were banned due to the Mercury Law which made the use of mercury for mining illegal . 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 (Ghana was a British colony) investors. 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 but not economic efficiency. There was little investment and exploration of new resources.

After 1986, when mining sector reforms started (as a part of the macro-economic policy reforms of the economic recovery programme (ERP) initiated in 1983), considerable technological development occurred accompanied by exploration. Gold mining shifted from underground to surface mining and this caused, inter alia, enormous environmental impact. The country passed extensive policy changes to attract foreign investments that included “a conducive policy, legislative and administrative framework more conducive to business, and a thorough privatization programme”. 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 most attractive geological and investment environment. (See ); (Read , pp. 7-16)

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