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Ghana has ordered all large-scale mining companies to sell 20% of their entire stock of refined gold at their refineries to the Bank of Ghana from Jan. 1, 2023, Vice-President Mahamudu Bawumia said on Facebook on Friday.
Ghana’s government is planning a new policy where gold rather than US dollar reserves will be used to buy oil products. The move is meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which is weakening the local cedi and increasing living costs.
“The Bank of Ghana and the Precious Minerals Marketing Company (PMMC) will coordinate with the large-scale mining companies to ensure compliance with this directive,” the vice-president said.
“The gold to be purchased by the Bank of Ghana and the PMMC will be in cedis at spot price with no discounts,” he added.
Community mining schemes and licensed small-scale miners will also have to sell gold to the government, Bawumia said, without specifying how much of their reserves would be affected.
Bank of Ghana communications officer Sam Opoku said he could not confirm or deny whether Bawumia’s order was being considered.
A spokesperson for AngloGold Ashanti Ltd said via email it had not yet received a formal directive on its gold reserves but looked forward to studying and engaging with the government once it does.
Gold Fields said neither the Ghana Chamber of Mines nor its Gold Fields Ghana unit had been formally approached on Bawumia’s plan and it could not comment, though it added that it and other miners had already agreed to a gold purchasing program with the Bank of Ghana.
“We have commenced with this program and will in total sell 15,000 oz to the Bank this year. Next year’s amount is still being finalized with the authorities,” a Gold Fields spokesperson said, referring to the company’s amount for this year under the program.
Newmont Corp, Galiano Gold Inc and Asante Gold Corp, which also have gold mines in Ghana, did not immediately respond to requests for comment.
An International Monetary Fund spokesperson did not immediately respond to a request for comment. Ghana is negotiating a relief package with the IMF as it faces its worst economic crisis in a generation.
Ghana produces crude oil but has relied on imports of refined oil products since its only refinery shut down after an explosion in 2017. It has seen its cedi currency plummet more than 40% against the US dollar this year.
(By Cooper Inveen, Helen Reid, Rachel Savage and Sofia Christensen; Editing by James Macharia Chege and David Holmes)
2 Comments
Ubaso Nwaozuzu
Hi there, I love this article!
Paying tribute to the nation’s gold reserves is a noble idea, and I believe Vice President Bawumia’s order is an excellent step in the right direction.
It is encouraging to see that some of the most prominent players in Ghana’s gold mining industry have already agreed to a purchasing program with the Bank of Ghana.
The current economic crisis has seen the cedi currency plummet more than 40% against the US dollar this year, making it even more critical for Ghana to take all possible measures to strengthen its economy.
This plan could be further optimized by ensuring that any new taxes imposed on gold miners are not excessive or counter-productive.
This way, the government, and miners can all benefit from a healthy gold mining sector.
Furthermore, I believe the IMF should provide some relief package to support Ghana’s economy during this difficult time and encourage investors to continue investing in Ghana’s gold reserves.
Overall, I think Vice President Bawumia’s plan is commendable and could benefit local businesses and the economy if implemented correctly.
This article has provided an insightful overview of the subject, and I am grateful for the information provided.
Thank you!
BOB HALL
Every nation that has seen it’s currency drop against the dollar is looking for a way to compensate. This plan is the credi converting directly to gold and is fraught with the same issues. Trading crude oil directly for refined product would be a more direct option – if you can find a willing trader. How can a nation let the only refinery in the land sit for 5 years without repair? I see why the credi is falling against major currencies.