The benefits of establishing a local gold refinery broadly aligns with BoG’s objective to build adequate foreign reserves – Addison

Governor of the Bank of Ghana (BoG) Dr Ernest Addison has extolled the creation of a local gold refinery, Royal Gold Ghana Limited in Ghana.

Dr Addison said the central bank can diversify and organically grow its foreign exchange reserves, as well as accumulate more refined gold reserves to reduce dependence on external borrowing.

The presence of a local gold refinery will enable the production of gold coins and other artifacts which can act as a safe-haven asset, and will broaden investment options in the financial markets and contribute to financial stability, he said.

Dr Ernest Addison said that gold is currently the leading export commodity with projected export earnings for 2024 estimated at close to US$10 billion.

Its value chain presents immense opportunities for job creation, increased foreign exchange earnings, and economic development, he said.

Even though Ghana has exported minerals, in particular Gold for over a century, its full potential on the local economy has yet to be fully realized, he observed.

The exportation of raw materials without value addition results in potential loss of revenue and jobs, he said during the opening of Royal Gold Ghana Limited (RGGL) on Thursday, August 8.

Dr Addison said the opening of this gold refinery opens a new era to promote gold beneficiation and value addition which will contribute to economic growth, poverty reduction, and ultimately improvement in the livelihoods of Ghanaians.

These are all based on the notion that value addition to Ghana’s gold resources holds the potential to increase foreign exchange earnings, improve the balance of payments position, and in turn, provide enough buffers against external vulnerabilities and shocks to the economy, he said.

“This refinery will also play an important role in reducing gold smuggling, which has been a major challenge for the country over the years. By providing a ready market for artisanal and small-scale miners, the gold refinery can mitigate the incentive for smuggling and help promote transparency and accountability in gold trading,” Dr Addison said.

In the long run, he added, when RGGL receives London Bullion Market Association (LBMA) Good Delivery List accreditation, Ghana will gain additional benefits such as reduced dependence on foreign refineries.

Also, he said, the central bank can diversify and organically grow its foreign exchange reserves, as well as accumulate more refined gold reserves to reduce dependence of external borrowing. Last but not the least, the presence of a local gold refinery will enable the production of gold coins and other artifacts which can act as a safe-haven asset, and will broaden investment options in the financial markets and contribute to financial stability.

“Today’s event will no doubt provide impetus to BoG’s successful Domestic Gold Purchase Programme (DGPP). Under the DGPP, the Bank of Ghana has been able to accumulate sizable foreign exchange buffers, for the most part, significantly exceeding expectations under the IMF programme. Since inception of the Domestic gold purchase programme, the Bank of Ghana has bought 65.4 tons of gold, valued at US$5.07 billion. This year, since January, the Bank has bought 23 tons of gold valued at about US$1.8 billion. The programme, along with other donor disbursements, puts the Bank in a favourable position to support the country’s external payments obligations as and when they fall due.

“The benefits of establishing a local gold refinery broadly aligns with Bank of Ghana’s objective to build adequate foreign reserves to stabilise the economy during adverse domestic and external shocks and help achieve its core mandate of price stability, and we are extremely pleased with the opening of the Refinery today. Finally, let me congratulate the Board, Management, and staff of RGGL on this achievement. Your hard work and dedication have paid off, and we look forward to impactful operations of this new refinery on the Ghanaian economy. To the key stakeholders, including the Government of the Republic of Ghana, mining companies, and artisanal and small-scale miners, I urge you all to support this bold initiative. Let us work together to promote the growth of our gold industry, add value to our natural resources, and build a prosperous future for our nation. Congratulations to RGGL once again and I wish you success in your operations. Thank you and May God bless our homeland Ghana.”

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