Some gold mines in Ghana are about to be closed mainly due to power shortages that interfere with operations. The Chamber of Mines in Ghana has declined to name the mining companies.
The Chamber has continuously called for lower taxes on diesel but the government wasn’t fast enough to provide for a solution that would save mines from shutting down. Ghana’s Minister of Power, Kwabena Donkor, however, is confident enough to say that he’d resign if he can’t fix the electricity cuts by January next year.
“I have heard of mines who are at the edge and are looking for buyers due to a combination of factors,” says Sulemanu Koney, The Chamber’s CEO. “[Mining Companies] can’t pile up other unplanned costs like using generators for long hours.”
Early this year, mining companies all over the world enjoyed longer operational hours for less cost because of low oil prices. However, Ghana’s oil taxes make it impossible for companies in the country to enjoy the rollback. Other factors that affect the power shortage in Ghana include falling water levels that power up hydroelectric dams and the shortfall of natural gas in the country. The common practice is that the government pulls the plug on electricity for up to two days in order to offset the shortage.
According to reports, companies have also decided to sell their mines because of falling gold prices. Early in January, gold prices soared thanks to a number of factors including the European Central Bank’s Quantitative Easing and India curbing its gold import law.
While falling gold prices are used as a signal to sell by some, others aren’t affected by it. BullionVault mentions that The Bundesbank, Germany’s Central Bank, has no intentions of selling its gold until 2020 (See: https://www.bullionvault.com/gold-news/germany-gold-011620122). Germany has always seen the precious yellow metal as hedge to a bad economy and doesn’t use it for short-term gains.
Ghana is Africa’s second largest gold producer and the closure of some of its mines would significantly affect its GDP. Gold currently makes up for >90% of the total mineral exports in the country.