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Ghana's golden dilemma. (Feature).

Should environmental concerns outweigh the need to exploit mineral resources to boost the economy? This is the "golden dilemma" facing the Ghanaian government as it decides whether to approve a $2 billion mining investment or give in to environmental demands to save a large chunk of the country's rich rainforest.

From the late 1980s to the mid-1990s, Ghana enjoyed a mining boom, especially in the gold sector, as a result of a liberalised economic climate and a favourable mining code. This made the country (known in colonial times as the Gold Coast), the second largest producer of gold in Africa, behind South Africa. Currently, gold is Ghana's number one export, beating cocoa to second place. Gold contributes 45% of foreign exchange.

But over the past five years, only a handful of mines have opened, making the new $2 billion investment such a bone of contention between the government and environmentalists.

The problem is that all the new deposits, in "staggering volumes" (the words of the mining companies involved) lie deep in Ghana's forest reserves. The companies are ready to tear apart thousands of hectares of rainforest in the Western, Ashanti and Eastern regions if the government gives them the go-ahead.

"The fact is, collectively we have spent over $10m in the reconnaissance and prospecting exercise, and we have to recoup our money," says a spokesman for the companies, all Ghanaian-based subsidiaries of major Western multinationals.

They include Chirano Goldmines (owned by the Australian company, Red Back Mining); Satellite Goldfields (owned by the US company, Golden Star Resources); Nevsun/AGC (a joint venture by the Ghanaian company, Ashanti Goldfields and the Canadian company, Nevsun); Birim/AGC (owned by Ashanti Goldfieds); and Newmont Ghana (owned by the US giant, Newmont, the largest mining company in the world, which, in mid-April, announced a $450m investment in Ghana to be located in the Western and Brong Ahafo regions).

The affected rainforests include the Subri River Forest Reserve, a globally significant biodiversity area that is also the largest reserve in the country and a critical watershed for two major rivers, Bonsa and Pra.

The others are the Supuma Shelterbelt, the Oppon Mansi, Tano Suraw and Suraw Extension Forest Reserves -- all in the Western region, and the Atewa Range Forest Reserve in the Eastern Region, believed to be the most mineralised reserve in the country.

To help the government make an informed decision, the environment minister Dominic Fobih, the mines minister Kwadjo Adjei Darko, and the lands and forestry minister Kasim Kasanga, have gone on a fact-finding trip to the affected rainforests.

"It is true that rich deposits of gold have been discovered in the forest reserves," Darko confirmed, but was quick to distance the current government from the original decision to award prospecting licenses to the companies. "We inherited the problem from the past government," Darko continued. "Whether they were coerced into granting the prospecting licenses or not, we don't know. But we are in a crisis, and we don't know what to do in the present circumstances.

Shifting the blame squarely onto the past (Rawlings) government, Darko added: "The mining companies were given permits to do prospecting in the reserves by the past administration. The Forestry Commission, the Environmental Protection Agency (EPA) and all the relevant statutory bodies were parry to it. The companies invested millions of dollars and found gold deposits in commercial quantities.

"Are we justified in saying that the companies should not go into the forest reserves again?," asked Darko. "Do we have to leave those rich deposits of gold in the ground whilst we have a lot of problems on our hands such as poverty, underdevelopment and unemployment?"

Giving an indication of the government's line on the issue, Darko accepted the importance of preserving the forests but stressed that, "nature has given us these resources to be tapped and managed for development, so it is the way we go about it in order not to offset the balance.

"If we say we won't allow them to mine in the reserves," he continued, "what signals are we sending to other investors? It means this is a country where investments are not secured, where there are a lot of uncertainties, and by the stroke of the pen you can lose your investments. So we are at a cross-roads, and as a nation what do we do?"

The minister claims that some of the areas the environmentalists call "forest reserves have already been logged, while farmers have taken over others. "It will not help us as a country to sit on the gold deposits only for illegal miners to rush in and destroy the forest reserves, with no income to the state. If we can ensure that the mining companies go about their business properly, and reclamation is on course, it will benefit the nation.

But environmentalists and human rights activists are not impressed. They say the affected reserves are some of Ghana's undisturbed natural forests, and allowing surface mining in these ecologically fragile areas (as some of the companies want to do), will aggravate the already alarming rate of deforestation in the country and wreak havoc on freshwater systems.

Rivers and streams criss-cross nearly all the affected forest reserves and feed into major rivets that are sources of water supply for many villages, towns and cities. Surface mining operations require the clearance of vast stretches of topsoil and vegetation. This can pose threats to plant and animal life.

"It rakes 40 years for these forests to regenerate and once you dig up any portion, you change the character of the place forever," the environmentalists argue. "Operating a surface mine which requires heap leach facilities and the use of highly toxic chemicals such as cyanide and arsenic will destroy the water bodies that are sources of drinking water for millions of people."

The environmentalists fear that when the rains come, water, laced with deadly cyanide will run off the tailings or waste from the mining activities into the rivers.

Warning that they will fight hard to block any mining in the affected rainforests, the environmentalists have urged the government not to be complicit in the destruction of the last vestiges of forest resources in the country as the issue could attract international attention and create a public relations liability for the government.

But the pro-mining lobby is not beaten yet. Their key argument is: "Ghana needs money, let's get the trees and wildlife out, get the gold out of the ground, the forests can be replanted and the animals will come back."

"Not so," says David Kpelle, director of programmes of Conservation International. "These forests perform priceless services to humanity, that is why they were set aside by the colonial administration and designated as protected areas to be maintained in a relatively undisturbed state requiring strict protection with minimal human disturbance."

RELATED ARTICLE: GHANA

French bank takes over SSB

One of Ghana's leading banks, the SSB Bank got a major push in early March when France's Societe Generale (SG), took over a controlling stake of 50.72% in one of the biggest single transactions in a listed company on the Ghana Stock Exchange.

The investment makes SC the majority shareholder in the SSB with over 33 million ordinary shares, pushing SSB's share price up by more than 10%. The transaction gives SG control of management.

With 38 branches nationwide, SSB will benefit immensely from the transaction since it lacked the international linkages that other major banks in the country had. SG, with a presence in 80 countries, will bring its massive experience in product development to the SSB and make it one of the best banks in Ghana.

The SSB's shareholding structure now stands at: SG 5 0.72%, Social Security and National Insurance Trust (SSNIT) 21%, retail shareholders 28.28%.

SG officials say they chose the SSB because of its strategic product base.
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Author:Offei-Ansah, Jon
Publication:New African
Geographic Code:6GHAN
Date:May 1, 2003
Words:1311
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