Ghana’s Mining Coys Still Face With High Cost Of Power

Parliamentary Select Committee on Mines and Energy, Executives of Chamber Mines and mining companies at mining site

Tarkwa, Western Region, September 19, 2019//-Mining companies operating in Ghana are still facing the obnoxious high cost of power despite a stable supply of electricity in the West African country.

This situation serves as a disservice to the companies. It also threatens the country’s quest of becoming an industrialized economy in the future.

Sulemanu Koney, the Chief Executive Officer (CEO) of the Ghana Chamber of Mines, disclosed this during an interaction with some members of the Parliamentary Select Committee on Mines and Energy in Tarkwa  in the Western Region last Monday.

He continued: “If you look at the cost of power to industry is mind blogging. You just can’t be competitive. That is why traditionally we are not leapfrogging”.

“So, if we want to industrialize, we must look at our tariff structure. If you look at the tariff structure, you ask yourself why?”

Industry is crossed subsidizing. We have been talking about this for long time but nothing is yet to be done about it, Mr Koney stated.

“It is the very reason of high cost of power to industry that we have VALCO in its current state. Most of its pipes are not running due to high cost of power”, he stressed.

Mr Koney said: “The cost of power to the mining industry is too high. If we want to industrialize, we need to do something about the high cost of power in the country”.

The Chief Operating Officer (COO) of Ghana Manganese Company (GMC), Benjamin Atsu Quarshie added that his company was planning to set up a smelting plan in the country but the high cost of power and regulatory challenges were delaying the process.

Due to the absence of the smelter in the country, the Chinese owned manganese company hauls the bulk of the ore by trucks to Takoradi Port and ships in that same for to China for further processing. This affects the road network in the region.

Cost of producing an ounce

For instance, the average cost of producing an ounce of gold by the Chamber’s producing member companies, as measured by the All-In-Sustaining Cost (AISC), increased from $ 935 per ounce in 2017 to US$ 941 per ounce in 2018, according to the 2018 annual report of Ghana Chamber of Mines, the umbrella body of mining companies in Ghana.

This is relatively higher than the global AISC of $ 909 per ounce in 2018 reported by Metals Focus and World Gold Council. The 0.6 per cent expansion in cost was mainly due to the general increase in mining cost and decline in production.

AISC is a proprietary metric of the World Gold Council that measures production and other costs related to sustaining current gold production and sustaining capital expenditure.

Appeal for government

Mr Koney therefore appealed to the Members of Parliament (MPs) who were in the region to ascertain issues affecting the operations of the mining companies, to intervene.

The Vice Chair of the Parliamentary Select Committee on Mines and Energy , George Mireku Duker assured that the mining companies’ concern would be factored into next year’s budget.

Contribution to economy

Ghana’s mining sector has witnessed a steady growth in recent times, contributing significantly to revenue generated by the government.

The mining sector contributed GH¢15.8 billion and GH¢17.1 billion in 2016 and 2017 respectively. Proving to be one of the largest sources of revenue to the government as mineral royalties, corporate taxes and employee income taxes play pivotal roles in collecting revenue from the sector.

The increment in revenue is mainly attributed to the increase in the volume of production of traditional minerals, coupled with favourable prices of commodities on the international markets.

Bauxite production increased appreciably from 1.3 million metric tonnes in 2016 to 1.5 million metric tonnes in 2017.

Manganese production saw an increment of 49% in 2017 over manganese produced in 2016, representing 3 million metric tonnes.

Gold produced by the large-scale mining companies declined from 2.808 million ounces in 2017 to 2.807 million ounces in 2018. The sub-sector’s performance was mostly a reflection of the near-symmetry in expansion and contraction in production across the country’s large-scale gold mines.

The significant growth in the mining sector would not have been possible without the input of foreign investors.

Currently, AngloGold Ashanti, Gold Fields Ghana, Newmont Ghana , Golden Star Resources, AsankoGold, Chirano Gold mines, among others continue to invest in Ghana’s mining sector.

By Masahudu Ankiilu Kunateh, African Eye Report

 

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