What’s Next for Ghana’s Mineral Exports

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KEY POINTS

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• Gold dominates Ghana’s mineral exports, but diversification into lithium and rare earths is growing.
• Challenges like illegal mining and price volatility threaten the sector’s sustainability.
• Value addition, sustainability, and strong regulations are critical to securing Ghana’s mining future.

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Mining has been the powerhouse of Ghana, the leading gold and other minerals producing country in Africa. As it is the predominant mineral export contributing to approximately 90 percent of the sector, the country is among the largest gold producers in the world.

But as the demand for minerals changes across the world and as the stakes for sustainability are raised, new questions emerge about the future of Ghana’s mineral exports.

Will the country diversify its mineral base, or will it focus on sustainable mining practices to maintain its competitive edge?

Current landscape of Ghana’s mineral exports

Gold continues to be the mainstay of the mineral export business in Ghana. In 2022, the country yielded more than 129 metric tones of gold, that acted as source of income for the government as well as source of foreign exchange earnings.

Major mining companies like AngloGold Ashanti and Newmont Goldcorp dominate production, but small-scale miners, many operating informally, also play a significant role.

Beyond gold, Ghana also exports bauxite, manganese, and diamonds.

The Integrated Bauxite and Aluminum Industry Master Plan, launched in 2020, aims to process bauxite domestically, adding value before export. Similarly, there is growing interest in exploring other minerals like lithium, which is crucial for battery production in the renewable energy sector.

Opportunities in diversification

To secure the future of its mineral exports, Ghana is exploring diversification beyond gold.

Minerals like lithium, cobalt, and rare earth elements are in high demand due to their importance in renewable energy and electric vehicle manufacturing. Ghana’s lithium deposits in the Ewoyaa region have drawn the interest of investors, with exploration projects already underway.

In addition to tapping into new mineral markets, Ghana is working to process raw minerals locally.

The government’s Minerals Development Policy emphasizes the need for value addition, aiming to increase the country’s share of the global mining value chain. Processing minerals locally could create jobs, boost revenues, and reduce the economy’s reliance on raw exports.

Challenges facing Ghana’s mineral sector

Despite its potential, Ghana’s mineral sector faces significant challenges. Illegal, or rather ‘galamsey’ Mining has led to environmental degradation in the form of deforestation and water pollution.

In general, such activities jeopardize ecosystems; at the same time, they spoil Ghana’s image of a suitable partner for mining in the international market. The government has launched campaigns to combat illegal mining, but enforcement remains inconsistent.

There is also uncertainty in global mineral prices, which may also fluctuate in the middle to long run. Volatility of demand also affects the export earnings especially for gold and other minerals hence diversification is imminent.

Furthermore, the shift to sustainable mining practices will entail major capital outlays, as global markets increasingly demand ethically sourced and environmentally friendly minerals.

The path forward

If Ghana is to successfully manage the future volatility of mineral exports, it has to make sustainability, diversification, and value addition its strategic cornerstones.

Increased regulatory measures on issues arising from the exercise including illegal mining, and pollution of the environment are required.

There is then the role of public private partnerships to support financing of local mineral processing infrastructure, as well as partnerships to support investment in relatively new sectors such as lithium and rare earth mining.

Policies such as the African Mining Vision (AMV), which supports the utilisation of minerals for development in the continent will help Ghana.

Ghana has the opportunity to support its economy continuously and satisfy the needs of the international market with ethical and sustainable minerals, if the country’s mineral resources are managed correctly.