Nadia Ouedraogo, PhD Research Fellow, UNU-WIDER The Gold “Coast” or Gold Belts of West Africa, Problems and Opportunities
INTRODUCTION • The “Gold Coast” of West Africa has become one of the most significant regions for gold production in the world because of significant mineral deposits hosted in the prolific gold belts and greenstone belts of the region. • With over 150 million ounces of gold historically produced, investors’ interest in this region is growing rapidly.
I. West Africa Gold Mining – The New Frontier Figure 1: gold belts of West Africa • Known reserves and resources in West Africa are gathered in 4 distinguished zones namely: • The Ashanti Belt , Sefwi Belt , Asankrangwa Belt and the Kibi Belt make up the four mains north-east trending gold belts, or the “Gold Coast ” of West Africa. • These belts stretch across Ghana, Burkina Faso, Mali and Cote d’Ivoire . Source: Euro Pacific Canada's special report, 2011
I. West Africa Gold Mining – The New Frontier (2) Figure 2: Major West African Gold Deposits and Mines N.b: Moz refer to historic production and current gold resources. Source: Data compiled by MinEx Consulting, August 2011.
II. West Africa Gold Mining – Potential and Opportunities Figure 3: Known gold deposits in West Africa by country Total known gold deposits Gold Deposits found since 2001 Country No. No.(> 1 Moz) Total Resource % of Total No. No.(> 1 Total Resource % of Total + Production* Moz) + Production* (Moz) (Moz) Burkina Faso 26 12 41.9 11% 11 5 19.8 44% Cote d’Ivoire 15 4 13.9 4% 7 - 2.6 6% Ghana 38 19 205.9 55% 10 2 7.5 17% Guinea 3 2 17.5 5% - - - - Liberia 2 1 2.3 1% 1 0 0.8 2% Mali 23 9 71.0 19% 9 - 4.5 10% Niger 4 1 4.2 3% - - - - Senegal 5 3 10.8 1% 4 2 7.5 17% Sierra Leone 3 1 3.2 1% 1 1 2.5 5% 119 52 370.7 100% 43 10 45.2 100% Total/Average *Based on discoveries made in the period 2001-10 for primary gold deposits containing more than 100 koz of gold. Excludes artisanal workings. Source: MinEx Consulting, July 2011 .
II. West Africa Gold Mining – Potential and Opportunities (2) Figure 4 : Average cost per ounce for new gold discoveries (2001-2010) Exploration Average Discovery Country Expenditures (2010 Gold found (Moz) Cost (2010 US$/oz) US$ M) Burkina Faso 314 19.8 16 Cote d’Ivoire 205 2.6 78 Ghana 455 7.5 60 Guinea 104 - - Liberia 34 0.8 42 Mali 316 4.5 70 Niger 29 - - Senegal 206 7.5 28 Sierra Leone 60 2.5 25 Total/Average (West Africa) 1,723 45.2 $38 $37 Total /Average (Rest of World) 17,831 481 Source: Analysis conducted by MinEx Consulting based on expenditure data provided by the Metals Economics Group 2011
II. West Africa Gold Mining – Potential and Opportunities (3) Moreover, the rise in gold prices during the past decade has stimulated the exploration and development of projects; And, the ongoing success of mining projects in established mining countries in the region over the past few decades, which has instilled confidence in explorers in less well-developed, higher-risk countries such as Côte d’Ivoire . West Africa has thus experienced significant growth in gold production over the last two decades to 6.7-million ounces in 2010 (nearly 8% of the global supply). Continued growth is forecast at about 11-million ounces by the end of 2015.
III. Impact Of Mining On The National Economies Fig 4: Direct and indirect GVA from gold mining for the top gold-producing countries in West Africa in Fig 5: Sectoral Value Added-2012 (% of national GDP) 2013, compared against the contribution of direct and indirect GVA to each country’s national GDP 30 Agriculture Services 1 Industry 2 Gold Mining 3 Country 25 Mali 38% 32% 21% 16% 20 15 Burkina Faso 33% 36% 25% 10.90% 10 Ghana 22% 47% 28% 8.30% 5 1 Including government, wholesale and retail trade, transport, financial and professional services. 0 Ghana Mali Burkina Faso Côte d'Ivoire 2 Including mining, manufacturing, utilities and construction. Direct GVA (US $bn) Indirect GVA (US $bn) Indirect and direct GVA as a % of GDP 3 Gold mining is shown on its own as a sub-component of industry. Source: Data compiled from Maxwell Stamp analysis based on GFMS, Thomson Reuters Gold survey; GFMS, Thomson Reuters Gold mine economic service; The London Gold Market Fixing Limited (TLGMFL) and World Bank. 2015
III. Impact Of Mining On The National Economies (2) Fig 6: Comparison of the average gold mine employee wage Fig 7: Percentage of women in the workforce of gold mining compare to the national wage (GNI/per capita ) in 2013 operations in different countries 180,000 16 160,000 14 140,000 12 10 120,000 8 100,000 6 80,000 4 60,000 2 40,000 0 20,000 Canada United Burkina Côte d'Ivoire Ghana South Africa Bostwana States Faso 0 Percentage of women in the workforce of gold mining operations Ghana Côte d'Ivoire Burkina Faso World Gold mining industry average Revenue per employee (lhs) GNI per capita (rhs) Average employee salary Source: Maxwell Stamp analysis based on World Gold Council Responsible gold mining and value distribution survey, This is Gold survey
IV. Challenges and Contraints Social impact • Gold extraction directly and indirectly affects the socio-economic and socio- cultural environment of communities. Such social impacts range from health, conflicts, problems related to drug use, alcoholism, robbery and high divorce level. Environment • Lands are rendered unproductive because of the removal of the top soil and other damage. • Land clearance for construction in mine sites leading to vegetation destruction, forest degradation and soil erosion, causing sediment loading in water bodies and the non-protection of watersheds.
IV. Challenges And Contraints (2) Land and Water Access • Conflict arises at the local level where mining is perceived as competing with agriculture and livestock grazing or other traditional land uses. • Displacement and resettlement of farmers from mining areas is also cause of conflict. • Conflicts also arise between agriculture and mining over access to water resources. Child Labour • Thousands of children in gold mines in West Africa, seeking to support themselves and their families. • Burkina Faso, according to UNICEF, almost 20,000 children were found to be working in artisanal gold sites. Illegal Mining • Illegal mining is typically artisanal and are prone to violence, unregulated immigration, environmental destruction, and many other issues.
IV. Challenges And Contraints (3) Infrastructure Constraints • One of the biggest constraints to gold explorers in West Africa is the lack of infrastructure. This has resulted in a focus on high-value, low-volume commodities, which can be produced on site, transported by air and sold. Power Supply • Lack of access to reliable grid power is another constraints and, on-site diesel power generation is an expensive alternative. Skilled Labour • The lack of a skilled workforce in less-developed countries is another challenge for potential miners.
V. Maximization Of Economic Returns • The royalty rates (a major source of revenues from the gold mining sector) in the region can be increased to enable countries to better profit from the sector while allowing firms to realize reasonable returns on their investments.
V. Maximization Of Economic Returns (2) Figure 8: Royalties Figure 9: Profit Tax Burkina Burkina Faso Faso Côte d'Ivoire Mali Sierra Liberia Leone Ghana Mali Guinea Senegal Liberia Ghana Niger Guinea Senegal Sierra Leone South Africa Niger 0% 10% 20% 30% 40% 0% 1% 2% 3% 4% 5% 6% Source: Data compiled from ADB (2012) and national mining code, 2015
V. Maximization Of Economic Returns (3) Another priority is the strengthening of the legislative framework and sanitation governance. Revenues and other benefits related to the sector are rarely used rationally and sustainably. Regional strategies for the development of mining sector are also crucial. These strategies could be based on three (3) areas: • 1. Integrate mining enclaves in national and regional economies; • 2. Develop local industry for excavation as well as refining; • 3. Develop human resources through training.
V. Maximization Of Economic Returns (4) Figure 10: Representation of interactions that can be created through the mining sector Transportation Industry Extractive Equipment Industry supplies
CONCLUSION • “The immediate future of gold mining in West Africa looks bright, with a high level of exploration activity and new mines coming on stream” . Jonathan Leng, mining industry analyst. • However, using the substantial amounts of gold resources to make a significant contribution to sustainable growth, development and poverty reduction, some reforms must take place. • Diversification, reinvestments, opening up of the gold industry, linkage creation, improvements of governance and institutional quality are essential to maximize the returns of gold mining … • … and to face a possible continued declining in international gold prices and to prepare the after-gold.
THANK YOU NADIA S. OUEDRAOGO; PhD www.wider.unu.edu Research Fellow @ouedraogo_nadia Helsinki, Finland
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