Mining industry moves to cement top gold producer spot

By Joshua Worlasi AMLANU [email protected]

Ghana is positioning itself to further solidify its status as leading gold producer on the African continent, leveraging several new mining projects coming online along with policy initiatives aimed at boosting exploration and production.

Gold output reached a record high of 4 million ounces in 2023, an 8.3 percent increase from the previous year according to the Ghana Chamber of Mines’ 2023 report. This remarkable growth was driven primarily by a surge in production from small-scale miners, offsetting a decline in the large-scale sub-sector.

Looking ahead, the country’s gold production is projected to range between 4.3 million and 4.5 million ounces in 2024, as anticipated increases in output from both large and small-scale producers are expected to drive further growth.

“Ghana’s gold production is expected to consolidate and potentially increase further,” said Mr. Suleman Koney, CEO-Ghana Chamber of Mines. “Several new mines are coming online, such as Newmont’s Ahafo North project, Cardinal Resources’ Namdini Gold Mine and Azumah Resources’ project. This healthy pipeline of new projects is positive for the industry.”

The Chamber forecasts that production from these new mines will supplement the planned output of existing producing member companies. As a result, the attributable production from the large-scale sub-sector alone is expected to reach between 3.1 million and 3.3 million ounces in 2024.

However, the overall increase in national gold production may be partially offset by the life-of-mine-related planned reduction in output from some major mines, including Gold Fields’ Damang Mine and Newmont’s Akyem Mine.

While the large-scale sub-sector remains a significant contributor, the small-scale mining industry has also played a crucial role in Ghana’s gold production surge. The sub-sector saw a staggering 70.6 percent increase in 2023, rising from 0.66 million ounces in 2022 to 1.1 million ounces.

This growth was driven by the recovery trajectory following a reduction of the withholding tax on unprocessed gold from 3 percent in 2021 to 1.5 percent in 2022. Additionally, government’s Gold for Oil programme in 2023 effectively relieved small-scale miners from paying the tax, providing further impetus for expansion.

As a result, the small-scale sector’s share in national gold production rose from 17.6 percent in 2022 to 27.7 percent in 2023 while the large-scale sector’s contribution declined from 82.4 percent to 72.3 percent during the same period.

Mr. Koney emphasised a need for continued policy support to sustain the industry’s growth. “The industry’s success cannot be taken for granted,” he cautioned. “Implementing certain policy recommendations, such as exempting exploration companies from paying VAT on big-ticket cost items like drilling and laboratory services, could incentivise more exploration and increase the likelihood of making more commercial finds”.

The Chamber has long advocated this VAT exemption, noting that it would improve cash flow, reduce operational costs and enhance Ghana’s competitiveness as a destination for exploration investment; ultimately helping to guarantee continuous mineral production and revenue generation for the country.

Mr. Koney welcomed government’s recent definitive statement about addressing the VAT on exploration, describing it as a significant development and the first time government has been so clear on the issue. He expressed optimism that with the necessary processes completed, this policy change can be implemented.

The industry landscape has also evolved, particularly in the small-scale mining sector. “It’s important to note that the industry landscape has changed, especially for small-scale mining,” said Mr. Koney. “Previously, there was no national assayer, but now all production must go through the Precious Minerals Marketing Company (PMMC) for assaying and recording. This provides more confidence in the production numbers reported, although it’s acknowledged that not all production – especially from the informal segment – may be captured.”

With the combination of new mines coming online, potential policy changes to incentivise exploration and improved structures for tracking production, Ghana’s gold mining industry appears poised for continued growth and economic significance in the coming years.

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