The Institute of Economic Affairs (IEA)

The Institute of Economic Affairs (IEA) has criticized the sale of Newmont’s Akyem gold mine project in Ghana to China’s Zijin Mining Group for $1.0 billion, calling the deal “flawed” and “damaging » to the interests of Ghana.

The Institute believes Ghana needs a new approach to its mining contracts, saying national ownership is necessary to create jobs, wealth and technical capacity for Ghanaians.

“The IEA notes that the lease for the project was signed between the Government of Ghana and Newmont on January 19, 2010 and has an expiry period of 15 years, valid until January 19, 2025. Under the terms, the lease is transferable during the duration period, subject to mutual agreement between the government and Newmont.

“The lease is also likely to be extended after its expiry by mutual agreement. The lease has not yet expired and, therefore, any decision by Newmont to sell the mine must be on a transfer basis and must be valid for the unexpired term only and subject to government approval,” asserted the IEA in a press release seen by GhanaWeb Business.

The IEA also stressed that Newmont must return the mine to the government at the end of the lease.

“At the end of the expiration period, Newmont is obligated to return the mine to the government, the rightful owner of the gold located on the surrendered land. Any company wishing to operate the mine after the lease expires must sign a new agreement with the government,” he adds.

The IEA also noted that no agreement has been reached for the transfer of the mine to Zijin for the unexpired term of the lease, nor has there been an extension of the lease agreed by the government.

The institute further revealed that some Ghanaian companies made respective bids for the mine but Zijin outbid.

The move, according to the statement, contradicts the President’s earlier statement in his State of the Nation Address, in which he emphasized the priority given to Ghanaian investors for such acquisitions.

The IEA therefore wonders why the president’s position has changed, favoring a foreign company over local investors.

The institute further noted that even Canada, where Zijin seeks to invest, has limited Zijin’s participation in its critical minerals sector for national security reasons.

The IEA stressed that Ghana’s natural resources are crucial to the country’s development and poverty eradication.

“The usual excuse put forward by Ghanaian officials that the country does not have the local capital and expertise to exploit its natural resources and therefore must depend on foreign investors and remunerate them accordingly is no longer tenable. Other countries facing conditions similar to those of Ghana have been able to negotiate much better conditions for the exploitation of their natural resources,” he alludes.

The IEA proposed two recommendations to improve the governance of Ghana’s natural resources and reduce corruption.

First, amend Article 257(6) of the Constitution, which vests natural resources in the President, to prevent unilateral decisions.

Second, introduce a provision in the Constitution or the Minerals and Mining Act, 2006 (Act 703), to prohibit the government from signing high-value contracts six months before the end of their term, thereby preventing transactions of last minute for personal use.

See the full IEA statement below:

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