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Business News of Thursday, 19 February 2015

Source: The Finder

Illegal foreign gold buyers fleece Ghana - PMMC

It is estimated that foreign traders in gold who have illegally invaded mining communities and are buying gold directly from small-scale miners as well as exporting the gold themselves are fleecing the country of hundreds of millions of dollars a year.

Mr George Abradu-Otoo, Managing Director of Precious Minerals Marketing Company Limited (PMMC), who announced this said, even though the law states that all gold produced by small-scale miners be exported by the PMMC, the situation on the ground is different.

He explained that small-scale miners prefer selling their gold to foreigners because the foreigners offer better price, even though, most of them are not licensed to buy or export gold.

This, he said, was denying the country millions of dollars that would have otherwise accrued to the state if all gold produced by small-scale miners were sold to the PMMC for export.

For example, last year, PMMC purchased and exported a paltry 35,461.30 ounces of gold just a little above one metric tonne, out of the 34 metric tonnes small-scale miners produced.

In addition, the PMMC also exported 7,164 kilos, which translates into a little over seven metric tonnes, for other licensed buyers.

Ghana produces about 100 metric tonnes of gold a year, and small-scale miners contribute about 34 metric tonnes out of the 100 metric tonnes.

This represents about 1.2 million ounces of gold produced by small-scale miners.

Considering that an ounce of gold sells for $1,000, gold produced by the small-scale sector would rake in about $1.2 billion a year.

However, Mr Abradu-Otoo said because relevant agencies have failed to crack down on the practice, the country is losing billions of dollars.

He explained that management and Board have initiated an ambitious plan to revamp PMMC, which was saddled with debt at the time the current board took over.

He noted that the Diamond Cutting and Polishing Plant has been shut down pending restructuring because it was no longer viable due to the falling prices of diamond.

He said plans were far advanced to partner private investors for a strategic partnership to revamp the plant, which would result in increased production using state-of-the-art machinery.

Mr Abradu-Otoo said three companies have submitted proposals expressing interest in the strategic partnership.

On building a gold refinery, he said PMMC is currently going through processes with Geo Professional Science and Mr Ramazan to terminate the contract.

The PMMC MD said the company has outsourced cleaning services and security, affecting 14 workers, but a clause in the contract with the companies demands that the affected staff be employed by the companies awarded the outsourcing.

Brigadier General Charles Richter-Addo, Board Chairman of PMMC, reacting to recent media publications, said the MD’s salary was decided after five months of research and consultations.

He said the PMMC MD’s salary is among the lowest among his peers.

According to him, the MD was coming from the banking sector to help transform the company and, therefore, it was necessary to pay him a commensurate salary.

He said the board met nine times since they came into office and not 26 times as reported in the media, adding the amounts quoted at sitting allowance were inaccurate and that they all receive less than GH?1,000 per sitting after deductions.