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Business News of Saturday, 16 August 2014

Source: B&FT

Dysfunctional railway system killing mining

The terrible state of the country’s rail-lines continues to be a major challenge for mining companies, forcing them to use costlier road transport to haul their minerals and equipment according to the acting CEO of the Ghana Chamber of Mines, Mr. Sulemanu Koney.

“Transportation of mineral ore from the mine to the port is done through road on account of the poor rail infrastructure.

“The cost of road freight is 50 percent more expensive than using rail. This has astronomically increased the cost of transportation to the port, by as much as 56 percent of the selling price of a given ore for a member company,” he told editors at a forum in Accra.

Currently, two of the world’s most sought-after commodities -- bauxite and manganese -- are being locked up in Awaso and Nsuta in the Western and Ashanti Regions due to the deplorable state of railway lines.

This development has angered residents of the two resource host communities, the mining companies, and the Ghana Mineworkers’ Union (GMWU) -- which issued a one-year ultimatum for government to reconstruct the Western rail line and the deplorable roads in these mining enclaves.

The old bauxite town of Awaso, which still produces the mineral after 66 years, looks dull, underdeveloped and decrepit.

The Bosai Minerals Groups, a Chinese firm, acquired 80 percent shares of the Ghana Bauxite Company with the Ghanaian government controlling the remaining 20 percent stake and is the sole producer of bauxite ore in the country -- which used to produce aluminum for commerce, transportation and other industries’ use.

The Awaso Mine is served by a rail branch line on the Western rail system while Ghana Manganese Company Limited produces manganese from Nsuta -- a small town and the capital of Sekyere Central, a district in the Ashanti Region. Nsuta is served by a station on the country’s national railway network.

However, since 2007 much of the bauxite and manganese ores go to the Takoradi Port by road due to the deplorable state of the railway system.

In the absence of the well-functioning railway system, these mining companies continued to make use of the more expensive road haulage from their respective mines, which adversely impacted on their operations.

The General Secretary of the Ghana Mineworkers’ Union, Prince William Ankrah, explained that “despite the huge deposits of bauxite and manganese in the Awaso and Nsuta areas, they are seriously under-exploited due to haulage challenges.

“We have, together with the two companies as well as the Ghana Chamber of Mines, appealed for government to as a matter of priority reconstruct the Western rail line that used to haul the two minerals to the Takoradi Port.”

The mineworkers believe this would expand activities of the companies, impact on government revenue and provide employment for the youth in the communities. There is no doubt that the businesses will be making savings to reduce cost. Related to this is the deplorable road network that links Tarkwa and Bogoso.

This strategic mining road, unfortunately, has deteriorated to the point where it is near impossible to ply it, Mr. Ankrah said.

“This is the road that miners ply every day to and from work. “This time we will not urge government but give a year’s ultimatum to fix the road, failing which the union will do everything within its power to withdraw labour in these areas.”

Mr. Ankrah said that rehabilitation of the railway network will not accrue to the benefit of the mining companies alone, but also provide a cost-effective alternative for transporting people and goods for other sectors of the economy.

In two different resolutions, he underscored the urgent need for establishment of a Mining Community Development Fund, into which 25% of mining receipts would be lodged to fund the much-anticipated and awaited infrastructure in those communities.

“Members of the GMWU think the country has failed to ensure the effective utilisation of its mining receipts for the benefit of the host communities.

“The current royalty apportionment to the district assemblies and traditional authorities needs rethinking to ensure its judicious use,” he said.

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