Ghana's new minister vows to revamp salt industry

Ghana's newly-appointed Minister for Lands and Natural Resources, Nii Osah Mills, has vowed to resolve all concerns and issues obstructing growth of the country’s promising salt industry.

“I will seek to resolve all concerns and issues around the salt deposit at Ada, including ownership, livelihood, and compensation to attract foreign investors to the project.

“It was in the light of this that the Ministry constituted a committee to study the situation on the ground and assess the compensation due expropriated interest holders of the Ada Songor salt project.”

Sharing his vision with officials of the Minerals Commission in Accra, Minister Mills said with the oil find, the country can benefit immensely if the salt industry is fully developed as a source of input for the Jubilee partners.

“My vision is to make the country a leading salt producer in the West Coast of Africa. I will work hard and collaborate with the Minerals Commission and other stakeholders to uplift the salt industry in Ghana to take its rightful place in Africa,” he said.

He indicated that the salt industry holds huge prospects for the country and Ghana can make enormous revenues from the sector, and also create jobs for the teeming jobless youth.

The salt industry is inevitably an area that needs to be exploited for the socio- economic development of our country, he said. 

Presently, the Ada Songor salt-producing area is in a deplorable state, and heavily encroached by indigenes. 

A company that was registered in 1992 never took off; its operations are still at the construction stage and the facilities are in a deplorable state…the site appears to have been abandoned. 

There are also multiple and conflicting claims to the land by 'supposed' land owners. What, then, is the way forward? 

Neighboring countries like Togo, Nigeria, Cote D’Ivoire, and Burkina Faso import salt from Brazil, Australia and Europe. 

Ghana and Senegal are the only two countries along the West Coast with the right climatic conditions and suitable land to produce appreciable quantities of salt. 

The country’s capacity for salt production is estimated at about 2.5 million tonnes per annum, but is only able to produce about 250,000 metric tonnes currently.

Together, Senegal and Ghana produce only a fraction of the demand for salt in the sub- region, leaving neighbours with no option other than to import from far away countries. In 2005, Ghana exported 51,150 tonnes of salt valued at about US$2.31million.

Market studies have also revealed that there is a great demand for Ghana’s salt, especially in neigbouring Nigeria which imports approximately US$1.5billion worth of salt from Australia and Brazil yearly to meet domestic demand and feed its oil industry. 

According to the United Nations Children’s Fund (UNICEF) report on salt and iodisation in August 2004, the total annual demand of salt in the sub-region was 4.5million tonnes.

The country’s salt industry dates back to the trans-Saharan trade. History indicates that the Ghana, Mali and Songai empires traded in salt, gold and Ivory -- and most of the salt traded at the time came from modem Ghana. 

Minister Mills also pledged his commitment to promote the lesser-known minerals such as the limestone.

“My interest is to see the development of iron ore deposits in the country. I also expect to evaluate the current data on all lesser-known minerals including clinker for the cement industry, and work with the Minerals Commission to promote exploitation of these minerals to move away from our dependence on few minerals -- Gold, Manganese, Diamond and Bauxite specifically.”

He called on the Commission to strengthen its monitoring role, especially for the operating large-scale mines as well as reconnaissance and prospecting companies, to ensure that they work according to the business plan for which their licences were granted.

He expressed regret about the continuous degradation of the country’s land and water resources, addingthat if drastic action is not taken on illegal mining, current and future generations will face serious environmental challenges.

“The illegal miners indiscriminately use harmful chemicals, such as mercury and cyanide which pollute the land and water-bodies,’’ he said.

Mr. Mills called for the support of all stakeholders to ensure the country wins the fight against illegal mining.

The Chief Executive Officer of the Minerals Commission, Dr. Toni Aubynn, expressed regret about the country’s over-reliance on gold to the neglect of other mineral resources.

He said the country could have averted the current economic challenges it is facing if it had paid attention to the other mineral resources, adding: “The country has huge mineral resources such as iron and limestone for the production of cement”.

Boosting best cocoa farming practices through farmer field-schools

More than 120 cocoa farmers belonging to the Aboanidua Cocoa Farmers’ group in the Western Region have benefitted from a capacity building programme initiated by Solidaridad West Africa, a non-governmental organisation that has been collaborating with stakeholders in the cocoa industry to implement sustainable-cocoa programmnes. 

The initiative, ‘Farmer Field School’, being implemented under the Cargill-UTZ certification project is aimed at helping cocoa farmer base group members to acquire skills on cocoa certification to improve their yields, and to become sustainable and professional in their farming activities.

The project is being implemented in two regions covering 10 districts and reaching 5,000 farmers in a 100 communities.  It is also targetted at educating farmers on the various good agronomic practices (GAP), personal health, and personal development

Farmers have increased their yields by more than 30 percent per year and improved the quality of the beans produced. Farmers were also taught record-keeping, labour rights issues, and sustainable farming practices.

Presently, cocoa buyers and consumers of chocolate around the world are increasingly demanding traceable cocoa that is certified as grown in a sustainable manner. As a result, a lot of cocoa- producing countries are grabbing the opportunities therein. 

Cocoa certification demands that a farmer’s social, environmental and economic activities fall in line with best labour practices, in exchange for receiving a premium price on the produce.

The standards will also push farmers to develop better drying and fermentation practices.

The Cargill sustainable cocoa programme ensures a better life for cocoa farmers and their families and strengthens the cocoa supply-chain for the future, exercising responsible environmental stewardship.

The programme increases farmer incomes through efficient cocoa production. It offers tangible customer solutions which enable them to join Cargill in the journey toward a sustainable future for cocoa.

Internal Control Systems (ICS) officer of the project, Yahya Zakana, said the productivity of all farmers has been recorded and is well-documented within the ICS to ensure farmers comply with the certification standards. 

The ICS is at the heart of certification programme as it documents and records the practices and activities of the farmers. 

“Based on the data gathered in the ICS farmers can be audited to ascertain that they have changed their practices and are adhering to the certification standard.

“The ICS is located at the Licence Buying Company level at district level. It also documents the training the farmers have gone through,” Zakana explained.

The session, conducted by Philip Kwame Kyei, a leading cocoa farmer and a district member of the Aboanidua Cocoa Farmers group, took his peer farmers through best cocoa growing practices.

Mr. Kyei interacted with farmers about general maintenance, the cocoa trees, their appearance, the leaves, flowers and developing fruit-pods. 

This is targetted at ensuring farmers will be able to analyse and observe best tree-crop growing methods and agronomic practices in the field.

“Cocoa farmers are motivated to meet at these demonstration events every week to learn various aspects of cocoa farming, especially the best agronomic practices as many have no training in cocoa farming,” Kyei said.

“Our training covers critical issues on how farmers can protect the environment by keeping a buffer between the water-body and farm to preserve water-bodies. They are also trained in the correct handling and use of chemicals, and as well the correct disposal of chemical containers,” said Kyei.

Social and safety issues are also discussed with farmers at the field farmer school, where labour rights issues and how farmers should relate with the labour force are clarified; and using child labour in the farms is discouraged. 

Project farmers also benefit from extension support provided through the Ghana Cocoa Board’s, Cocoa Extension Public Private Partnership (CEPPP).

Mines chamber hopeful of gov’t plans

The Acting Chief Executive Officer of the Chamber of Mines, Mr. Sulemanu Koney is hopeful of government plans to diversify the economy away from the dependence on primary exports for industrial development on the back of the minerals and mining industry.

“I am hopeful that the President's resolve to diversify the economy away from the dependence on primary exports for industrial development will soon be realised on the back of the minerals and mining industry.

“Government and other state advocates of mining, such as the minerals commission, must pursue deliberate, systematic and aggressive policies to channel Foreign Direct Investment (FDI) into non -gold minerals. Aside from insulating the country against external shocks in the event of a decline in prices of any metal, a diversified minerals sector provides a sustainable basis for economic growth," he noted.

Mr. Koney was speaking at a workshop on Ghana's Mining Sector organised for members of the parliamentary press corps in Accra, themed ‘Reporting on the Minerals Sector; What the Reporter Needs’.

He stressed the need to diversify the country’s minerals portfolio on account of the proven reserves of kaoline, limestone, salt, marble, iron-ore and other sought-after base minerals.

The Chamber of Mines, he said, recognizes the efforts of regulators in redefining their engagement with the industry: “it commits to work collaboratively to improve upon its turnaround time”.

Mr. Koney asked government to seriously work to ensure the ratification of minerals rights in the country as required by law, and said that failure to do this will not speak well of the country -- giving the impression that companies are operating illegally.

“As is well known, time is of the essence with regard to mining projects; and the industry reiterates its plea for governance issues which are entirely out of the hands of mining companies to be handled expeditiously by the aforementioned arms of government,” he said.

He encouraged regulators in the industry to endeavour to create an enabling environment to support activities of the mining companies, expressing worry over the long lead-times in the issuance of permits and licences: “Such delays drag the commencement of key projects and hurts the cash flow of mining companies, as well as significantly defers the receipt of fiscal revenue by the state”.

Mr. Simon Atebiya, Technical Director at the Ministry of land Natural Resource, in a presentation on “background, government policies and current status of the mining industry in Ghana”, observed that the country has over 20 years of stable multi-party democracy that has attracted into the country significant mining investment.

The sector has great capacity when it is integrated into the economy, which can be achieved through several channels -- including additional fiscal revenues from mining-related activities; employment generated by these activities; inputs provision for other sectors; research and development activities; and technology.

He observed that major challenges confronting the sector include inadequate linkages between the mining sector and the rest of the economy and poor diversification of the sector, which is concentrated on gold.

The Chief Executive Officer of the Minerals Commission, Dr. Toni Aubynn, urged District Assemblies to do well to stop illegal mining and stop blaming the Commission for not stopping illegal mining in their districts.

Gold Fields profit jumps to US$311m

Gold Fields has reported a 7% increase in operating profit to US$311million for the three months ended June 30.

The company’s revenue increased 4% quarter-on-quarter, from US$715million in the quarter ended March 31, to US$747million, as a result of higher gold sales, which was partially offset by the lower gold price.

Net operating costs increased 3%, from US$423million in the March quarter, to US$436million in the quarter under review.

Normalised earnings from continuing operations for the three months amounted to US$25million, up from US$21million during the March quarter, and losses of US$36million for the June 2013 quarter.

“During the June 2014 quarter, the group continued to focus on improving the execution and delivery at all the mines in the portfolio, to improve margins and generate free cash flow.

“This effort has achieved appreciable success in the Australia, West Africa and South America regions, while in the South Africa region there is on-going rebasing of South Deep to set it up for medium-term success,” Nick Holland CEO Gold Fields said.

During the quarter under review, South Deep’s production declined 14% quarter-on-quarter from 59, 200 oz in the three months ended March 31, to 51,100 oz -- owing to safety stoppages and an extensive ground support remediation programme.

Holland indicated that Gold Fields will, during the third quarter, focus on completing the support programme at South Deep and get the mine back to normal production levels during the fourth quarter. South Deep is still expected to reach cash break-even during the first half of 2015.

Meanwhile, Holland stated that all group activities at its operations are singularly focused on the objective of generating a sustainable free cash flow margin of at least 15% at a US$1,300/oz gold price, without compromising the long-term sustainability of the ore-bodies through a lack of investment in ore reserve development and stripping, or through high grading.

During the quarter under review, Gold Fields exceeded this target for the first time by achieving a free cash flow margin of 18%, compared with 13% in the March quarter.

To achieve this, the group recorded an all-in sustaining cost (AISC) of US$1,050/oz and an all-in cost of US$1,093/oz from attributable gold equivalent production of 586,000oz -- up 5% on the 557,100oz produced during the prior quarter.

Holland noted that by generating a free cash flow margin of 15%, the company was effectively setting its break-even gold price at US$1,050/oz. “If [the gold price] hit that level, we would like to retain the integrity of our development.

“By that, I mean that we wouldn’t want to cut development; we wouldn’t want to cut waste stripping, we wouldn’t want to [focus only on high-grade areas]; we would want to keep our current mine plan intact. But it would probably mean that we would be treading water for a while,” he said.

He added that should prices go up to beyond US$1,300/oz in future, the gold miner will keep its discipline and not be lured by the low-grade extra ounces that could be used. Gold Fields declared an interim dividend of 20cents a share payable on September 15.

Operations in Tarkwa and Damang mines

Tarkwa Mine achieved year to date production of 285,900 ounces at an all-in cost of US$1,021. “A great performance from Tarkwa, and we believe that there is a lot more to come,” Holland said.

During the quarter Damang Mine delivered another strong performance despite a nine-day mill shutdown -- as a result of which gold production decreased by 13% from 46,700 ounces to 40,500 ounces and all-in costs increased by 15% up to US$1,282 per ounce.

However, “We believe that during the current quarter -- and given the fact that we shouldn’t expect further mill shutdowns -- Damang should return to levels achieved in the March quarter,” he said.

For the year to date Damang has achieved production of 87,000 ounces at an all-in cost of US$1,192. Despite the unplanned nine-day mill shutdown, Damang has now consolidated its return to profitability from a loss-making position a year ago.

“We think this is going to continue well into the foreseeable future. Now, the strategy of revisiting historically mined open pits along the 27 kilometre strike between Damang in the north and Tarkwa in the south, which were last drilled when the gold price was between US$300 per ounce and US$400 per ounce, is starting to bear fruit, and is expected to contribute to an addition to Reserves and Resources by the time of the next declaration early next year.”

Success in this programme will redefine the future of Damang in the Gold Fields portfolio, and has the potential to extend the life of this mine substantially.

Holland explained that normalising production at Tarawa has taken place, and the transition from a mixed heap leach and carbon in leach operation to a CIL-only operation has progressed well; and the heap leach operations have been closed.

“We continue to rinse the heap leaches and we continue to get gold out of that, but there is no new stacking taking place as of the beginning of the year.

“The realised yield from our CIL plant increased from 1.19 grammes per tonne to 1.29 grammes per tonne,” Holland said.

During the June quarter the low-grade stockpile to the north-east was significantly less utilised than in the March quarter. And that resulted in an increase in the grade.

Local content intervention needed to grow petroleum sector

ZEN Petroleum, an indigenous oil marketing company in the country, has asked the National Petroleum Authority (NPA) and the Ministry of Energy and Petroleum (MoEP) to intervene with policies to help grow indigenous businesses in the downstream oil sector to ensure profit retention as against the capital flight by the multinationals companies.

The Oil Marketing Companies (OMC) business in the country is valued at some US$40million a year and it is currently dominated by multinationals -- with Shell Ghana, whose products are marketed by Vivo, and TOTAL being the biggest.

Mr. William Kwadwo Tewiah, Managing Director ZEN Petroleum, in an interview with B&FT said: “If we don’t take time the OMC business will go the way of the telecommunications companies, where there will be no Ghanaian business just foreigners.

“Unless there is some policy direction to tilt the trend toward local businesses, then I'm afraid competition will take indigenous businesses out.

“We have had that experience before, and if we still have to compete with companies that are owned by oil traders who determine the price of oil going into a country, then it tells you the challenge we are facing.”

Mr. Tawiah commenting on the country’s local content, explained that local content is not about local employment; there is a big difference between local content and local employment.

He explained that local content is about ownership of the business in the country: “It is not about how many Ghanaians are employed -- so local content is what happens in Dubai, where the Emiratis own the companies but they employ foreigners.

“But the important thing is that the profit remains in the country, the profit adds to the wealth of the country because people in the country who are making the profit take the decisions; they have management control of the companies. That is what local content is all about.

Local content, he said, “is when you have banks, media houses, hospitals, industries, that are Ghanaian-owned or have the majority shareholders here, then the profit stays here”.

Mr. Tawiah indicated that ZEN Petroleum had in years gone by been barred from bidding for certain contracts in the mining sector, “simply because we are a local company”.

He observed that there is an element of confusion that the country needs to clear up regarding the local content direction.

“Local content is about who owns the company. It is about how many Ghanaians are getting profit from companies that they own, and not how many Ghanaians are being employed.

“In the downstream sector there are 105 oil marketing companies, but the important thing to point out is that the top-two are foreign companies and they have the largest market share -- and that is bound to grow because we’ve also licenced more of them to come.

“There are other foreign companies that are coming to participate in the local downstream sector,” he stated.

ZEN Petroleum -- which currently supplies about 10 million litres of diesel to some mining companies, including Goldfields Ghana Limited -- Mr. Tawiah said started operations four years ago with a specialisation in fuel-supply to the mining companies; a segment of the business that is even more challenging.

He said although the company is young, it has grown its market share from zero percent in 2008 when it started to about 50 percent in the mine-fuel supply business.

The company recently set up an agency in Mali to supply fuel to mining companies in that country, with plans to establish another in neighbouring Burkina Faso.

“We are confident of making a mark in the OMC business in spite of the firm grip that multinationals have in the industry,” Mr. Tawiah remarked.