From gold to ghost towns – salvaging resource rich communities in Ghana

Some extractive industry watchers are skeptical about AngloGold Ashanti’s return to mine in Obuasi after its announced two year break to restructure operations.

The mine has been put under “care and maintenance” following operational losses recorded in recent times, a situation that has resulted in the retrenchment of over 5,000 employees.

“Basically we have some challenges with the production levels and the cost of production is also high, the gold price has gone down so there is the need to re-strategize and see how the mine can become profitable in the future,” said Aboagye Ohene Adu, Senior Manager in charge of Sustainability at the AGA Obuasi Mine.

But Dr. Steve Manteaw of the Integrated Social Development Centre (ISODEC) is cynical about the company’s come back.

“In my view you could still re-strategize without closing shop; scale down your operations and then you do your re-strategizing before scaling up your operations,” he observed. “I guess it would have been more difficult for government to accept and allow them to go if they said they were closing shops for good and I think the easier way would be to say ‘we are putting the whole mine under care and maintenance’ such that, in terms of the negotiations around that it would be much easier for them to exit.”

The inherent danger, according to Dr. Manteaw, is that the mining concession could be opened up to illegal mining or ‘galamsey’ invasions which could affect future prospective investor’ attraction.

However, based on the existing 6.5 million ounces of ore deposits currently available at Obuasi, Mr. Ohene Adu is positive gold prospecting in Obuasi could thrive for at least 17 years if AngloGold’s redevelopment is properly undertaken.

“We are trying to put in certain initiatives in partnership with the government to ensure that the communities here also become sustainable as we move along,” he said.

The AngloGold Ashanti mine is the backbone of the economy of the Obuasi municipality and four other adjourning districts as well as a key foreign exchange earner for Ghana.

Apart from the impact of the latest development on direct employment, peripheral services that feed off and depend on the mine would be hardest hit. The company would also withdraw funding of existing social services in the areas of health, education and sports.

Woes of local mining communities

Sanso is a predominant mining community in Obuasi. Local assembly representative, Benjamin Annan, says livelihoods are negatively impacted because there are no alternatives to mining for local communities.

“When the mining was underground, we were not having problems because we are farmers, but now surface mining has affected our farms. Now Sanso is ghost town; we can’t farm, we can’t have access to the mine because we’re not skilled labour and our source of livelihood – artisanal mining – is also closed,” he complained.

AngloGold has been engaging interest groups to offer alternative livelihoods that would protect local communities from turning into ghost towns, says Mr. Ohene Adu.

“The company alone cannot take the burden,” he noted, stating that some local economic initiatives are being thought through to create employment opportunities.

Richard Ellimah, a community rights activist and Executive Director of NGO, Centre for Social Impact Studies (CeSIS), says the company’s two year break is an opportunity to begin the process of designing an alternative industrialization programme for Obuasi.

“It was a long term decision we should have made. Everybody should have understood that there will come a time when the mining company will fold up; either they will find mining no longer profitable and they’ll leave or the ore will get depleted,” he observed.

According to Mr. Ellimah, Obuasi can sail through the current crisis if sustainable small scale mining is promoted alongside agriculture.

He therefore wants the Minerals Commission and AngloGold Ashanti to consider ceding off part of the mining concession for small scale miners to begin operations.

“If we have people in town who have the requisite capital and want to do mining, there should be available land for them to do their mining because for small scale miners, their operations don’t generate so much cost and they are indigenous companies who would not just fold up because gold price has fallen and the money will stay in the town,” stated Mr. Ellimah.

The Obuasi Municipal Assembly is already looking forward to improved working relations with AngloGold Ashanti when the mine is reopened for business.

Isaac Appiah Nsiah, Municipal Budget Officer, expects that “there should be more transparency with regard to how we generate revenue and how the communities are going to benefit from that. The Assembly itself is going to open up to the communities so that they would also know what they are getting from AGA and what we are utilizing the money for.”

Integrating mining into national economy

Nana Owusu Akyew Brempong of the Adansi Traditional Council is seeking divine intervention for AngloGold Ashanti to resume operations after the downscaling exercise “because we have suffered a lot and the Lord will change things for us”.

Ghana has failed to integrate its gold resource into the national economy after over 100 years of commercial mining.

Dr. Steve Manteaw says the Obuasi experience is a bitter lesson for Ghana to ensure that the extractives sector serves as conduit for sustainable development.

“When you as a policy want to integrate the resource into the rest of the economy, then you want to make a departure from collecting your royalties in cash to collecting them in kind as raw material gold so that you supply that raw material gold to the domestic jewelry making industry; when you do that you’ll be creating jobs, you’ll also be creating tax opportunities for financing local and national development”, said the ISODEC Coordinator.

In adding value to Ghana’s gold exports, Dr. Manteaw added that there is a multiplying benefit of integrating gold into the local economy, including tourism, as people troop to Ghana to experience the reflections of the “Gold Coast”.

Story by Kofi Adu Domfeh