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Opinions of Friday, 15 November 2002

Columnist: Antwi, Henry

Mining and Community Relations ? Learning from the Prestea episode

Ghana?s mining industry employs about 20,000 people, including small and artisinal miners (Amponsah-Mensah, 2002). Gold mining in Ghana accounts for approximately 95% of mineral exports value and makes a meaningful impact on the country?s Gross Domestic Product. These notwithstanding, current global political and economic conditions could trigger flight of exploration and mining capital to the so-called safe havens (Canada, Australia, USA, Europe) and developing countries such as Ghana could be the losers. It is against this background that the tension between the Prestea community and Bogoso Goldfields is a concern.

In some instances, mining companies have been accused of destroying farmlands, polluting water sources and degrading the physical environment. The industry is blamed for the ecological impoverishment of towns and villages. It must be acknowledged that Ghana, like many developing countries, is still at a very low end of the environmental awareness curve. Environmental policies and requirements are now seriously being debated, formulated and implemented in many developing countries. It is in the interest of Ghana to have a coherent, well-delineated set of environmental regulations in place. These regulations need to remain open to modifications and revisions to accommodate changing technologies and business realities.

Ghana has benefited from significant changes taking place in the global mining industry due to positive developments in the country, many of which are linked to political stability, record of performance of investments and the macro-economic policy framework. The challenge however is addressing the poor relations between mining companies and communities.

In general, mining involves many risks common to all businesses, plus heavy doses of physical, political, climatic and geological risks that few industries face. To develop and establish an operational plan for a mine, investors must be aware of exogenous information relating to general political and economic events, the business environment, the metal market within which the company operates and the science of accurately predicting the future performance of the operation. Simple microeconomic theory that might be applicable to most industries cannot be directly applied to mining. This is because mines have finite lives determined by the size of the deposit and the mining rate. Investors must receive an adequate return by the time the ore reserves are depleted, and new deposits must be continually discovered and developed through a carefully articulated programme.

These dynamics have led some mining companies to focus exclusively on returns on capital and therefore ignored community interests and concerns. In the process, some communities have been excluded from crucial decision making that impacts on their way of living. The Western Regional Minister, Hon. J. B. Aidoo, has reportedly called on the media to investigate why the people and the chief of Prestea are not satisfied with Bogoso Goldfields Limited (BGL) doing surface mining at Prestea. The disruption is not good for the economic development of the Prestea region, but no amount of goodwill can lead to a positive outcome unless Bogoso Goldfields and the government acknowledge the interests and concerns of the Prestea community.

Under the current mining legislation, all minerals are owned by the state and hence the Minerals Commission grants exclusive mining leases. Suorineni and Suglo (2001) highlight the problems associated with the acquisition of a mining concession in Ghana and identify that the system clearly ignores the chiefs under whose jurisdictions the concessions reside. Ahadjie et al. (2000) even went further to quantify that out of 612 individual companies that acquired concessions for small scale gold mining between 1989 and 1999, only 120 succeeded, partly due to cumbersome land acquisition procedures. The non-inclusion of chiefs in the land acquisition procedure means that special arrangements have to be made between concessionaires and chiefs to ensure co-operation during the mineral development and operational phases. The Prestea incident shows the flaws in the current system. Despite Bogoso Goldfields having official government approval, media reports indicate that there is resistance from the Chief and the community. There is therefore the need to streamline the land acquisition procedures.

The Prestea community has much to offer Bogoso Goldfields in the mineral resource development via local knowledge of the environment, land usage and skilled and semi-skilled workforce from the previous underground operation. Similarly, Bogoso Goldfields can also be a vital source of economic development that will benefit the people of Prestea in the form of employment opportunities, social development and other multiplier impacts on the local economy. There should therefore be the need for continual dialogue with the community and the implementation of steps to halt the adversarial and confrontational attitude.

There is the need to focus on peaceful conflict resolution, clarifications, accountability and information sharing with the Prestea community as quid pro quo for their enhanced participation. Particularly, there should be some assurance that royalties will go into basic social and cultural needs such as education and health. The community should be involved in the environmental monitoring process to ensure that concerns for traditional activities are addressed. I write from my own experience as part of a team that moved mining close to a community in New Mexico, USA. Our priority was promotion of sustainable, yet culturally sensitive development in the area we operated. Consultation with the local residents was vitally important. There was consultation at the various stages of mine development, closure and rehabilitation. These required the balance of environmental, social and economic factors with input from all stakeholders ? local government, the community, employees, shareholders etc. The government has to ensure that mining companies operate on a traditional ?good neighbour? policy and implement dispute settlement mechanisms to avoid the need for military and police presence that tend to create more tension within the community. More importantly, efforts should be made to streamline the land acquisition process to include traditional leaders in the early part of negotiations.

Out of an estimated US$2.2 billion spent on exploration for new mines in 2001, over 70% was spent in Australia, Canada, USA and South America. Due to the crises in the Middle East and tough global economic conditions, favourable geological conditions alone will not attract needed capital to Ghana. During a recent speech at the Western University College in Tarkwa, the Senior Underground Manager of Ashanti Goldfields, Peter Amponsah Mensah indicated that out of US$788.3 million investment funding allocated to Africa in 2000, Ghana had nothing, while countries like Tanzania had $389 million, South Africa ($300M), Mali ($159.3M) and Niger ($23M). He went on to mention that applications for exploration reduced from 60 in 1997 to only 2 in 2001 and assigned the reasons to the uncompetitiveness of the country?s mining regime.

A review of the current mining laws is a step in the right direction, but will require direct input from traditional leaders and community representatives to ensure that the interests and concerns of the custodians of the land are acknowledged. The mining industry has to remain viable and profitable while at the same time satisfying the needs and expectations of contemporary society, reasonable or otherwise. It is subject to consistent vilification through the media, and consequently fails to enjoy a high level of popular support for its activities. Hence, the mining industry is called on more often than many other industries, to justify, defend and be accountable for its decisions and actions. There is therefore the need for openness to the public and proper enforcement of safety and environmental standards. Let us draw lessons from the Prestea incident and accelerate the review of the current mining laws.

Henry Antwi
The Writer is a Mining Engineering Consultant based in Sydney, Australia

Views expressed by the author(s) do not necessarily reflect those of Ghanaweb.