A recent field study by Journalists for Business Advocacy (JBA), an association of economic and financial media practitioners, has unearthed the startling fact of 26 farmers standing between Ghana and the west African country getting a new gold mine that could generate about US$700 million a year. TOMA IMIRHE unravels the situation, the implications for stakeholders and their consequent stance; and what will likely happen.
When in 2022 Newmont Mining came to a negotiated agreement with over 1,000 land speculators to give them some GHc45 million in ‘relief payments” at the prodding of the Ahafo Regional Administration, the American gold mining firm thought they had crossed the last major hurdle in their way towards commencing the construction of its latest mine at Ahafo North.
The nearly US$1 billion project is expected to deliver between 350,000 and 375,000 ounces of gold each year over a 13-year life span. After all, agreements have been reached with the 250 households that need to be resettled to accommodate the mine.
Crop compensation to the tune of GHc186.255 million has been paid so far to farmers who will have to similarly move their farms as part of an ongoing process that will take the bill far higher, but is still in line with the budget the company drew up for it.
The overwhelming majority
But while the overwhelming majority of affected farmers are happy with what they are getting as compensation and are willingly using it to relocate the farms outside the designated mining area, a handful – just 26 of them – have bluntly refused Newmont’s offer.
This group calls itself Concerned Farmers. They own 36 farms within the delineated mining Area. Neither Newmont itself, nor the representatives of the youth in the area who have tried unsuccessfully to convince them to accept the offer and relocate, are quite sure what the Concerned Farmers want.
The youth associations that have engaged them individually, rather than as a group – in the hope of changing their minds – claim that their demands not only vary from one concerned farmer to the next, but keep changing too.
An insistence on compensation
Basically though, those demands range from an insistence on staying on their present farm locations, no matter what they are offered, to an insistence on compensation way beyond what has been collectively agreed by both sides through the Crop Compensation Negotiation Committee. Curiously, the leader of the Concerned Farmers was a member of that committee and only set up the recalcitrant group after being party to the negotiated compensation rate that his group now rejects.
While this has created all sorts of uncertainty, only one thing is certain: the stance of the concerned farmers is adding a further delay to an already inordinately delayed project that holds huge benefits for the local communities, the Region and the nation’s economy as a whole.
At the current global market price fix of over US$2,000 per ounce, the impending mine could generate over US$700 million in foreign exchange earnings yearly and based on current arrangements this would allow the Bank of Ghana to add some US$140 million to the country’s gross foreign reserves each year in the form of gold, through cedi payments to Newmont for the gold it purchases.
If the gold for oil initiative is sustained a similar amount in gold could become available for the importation of petroleum products, this reducing pressure on those reserves – and consequently the cedi – dollar exchange rate. At the same time, government would make huge fiscal income at a corporate tax rate of 35% in addition to the usual 10% freely carried equity in the mine it is entitled to and royalties due at a minimum rate of 3%.
It is the immediate benefits
But it is the immediate benefits to the local communities that are being delayed that are incurring the angst of the indigenes in the area. During mine construction some 1,800 new jobs will be created, a large proportion of them reserved for indigenes of the host communities as will the 550 permanent jobs to be filled when the mine enters actual production.
Local business enterprises have been promised huge opportunities as construction contractors and suppliers of goods and services too, with business worth US$3 million reserved for them during the first year of mine development and this is expected to rise further significantly during the second and third years of mine construction. Indeed, the supply of goods and services by local enterprises will continue all through the mine’s projected 13-year life span.
Little wonder then that most locals are indignant about the stance of the concerned farmers. Instructively, the antics of land speculators, which took about 18 months to resolve, has set the date for completion of the mine back by over 30 months, from the original target of the end of 2023 to mid- 2025.
Although Newmont is now positioned to begin many aspects of the mine’s development other key things will have to wait until the issue of the concerned farmers is resolved as well. This may still take considerable time; they have already rebuffed the conciliatory efforts of both the Regional Minister and the Asantehene.
Frustrated youth representatives in the area now allege that they are being instigated by WACAM, a community-based advocacy group, although there is no solid evidence supporting this allegation.
Ultimately though, the Concerned Farmers are fighting a lost cause. Ghana’s laws allow government to take the land their farms are sited on and pay them an amount set by the State’s valuation institution.
May eventually become inevitable
Although the government would prefer not to do this it is a last resort that may eventually become inevitable; not just because it desperately needs the tax revenues and foreign exchange revenues the project will provide, but also because of the pressure being exerted on it by civil society leaders in the area acting on behalf of virtually the entire population. One of the leaders has likened the ongoing impasse to the tail wagging dog, since just 26 farmers are blocking the benefits of the entire nation.
Ultimately, then it is a matter of when, not if, the government will apply the law to get the farmers out of the mining area. The key here is that failing to do so will not only be economically costly to the current cash-strapped government; it would be politically suicidal since there are hundreds of thousands of people who want such action to be taken against just 26 farmers and their households.
If the concerned farmers maintain their current stance, the government will be forced to do the needful.
