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Ghana to start domestic gold refining after century of mining

The project comes as Ghana seeks to get more out of its natural resources by increasing domestic processing of minerals and commodities, most of which are exported unrefined.

(Bloomberg) - 

Ghana, Africa’s second-biggest gold producer, will start large-scale domestic refining of the metal for the first time since industrial mining began more than a century ago.

State-owned Precious Minerals Marketing Co., which buys and sells gold and diamonds from small-scale miners, will start output at the 4.5 million-euro ($6 million) refinery by July, Managing Director Rueben Darko Damtey said in an interview on Jan. 21 in Accra, the capital.

“We will be able to buy more and offer better prices for gold from small-scale miners to reduce smuggling,” he said. The plant will have a capacity to refine 70,000 ounces (4,375 pounds) each year, Damtey said.

The project comes as Ghana seeks to get more out of its natural resources by increasing domestic processing of minerals and commodities, most of which are exported unrefined. President John Dramani Mahama, who won an election last month, pledged to create jobs and boost growth with manufacturing in the $35- billion economy, the second-biggest in West Africa.

Companies including Greenwood Village, Colorado based Newmont Mining Corp. and Gold Fields Ltd. of Johannesburg mine gold in Ghana. AngloGold Ashanti Ltd. operates the Obuasi mine, which started commercial production as the Ashanti mine in 1897, according to Benjamin Aryee, chief executive officer of the Ghana Minerals Commission.

Artisanal gold mining “started way back in the 14th century, before the first white man came to Africa,” he said in an interview on Jan. 23. Minerals from the small-scale miners will be processed at the PMMC plant, which will also take gold from miners in other regional countries, said Damtey. According to the Ghana Chamber of Mines, larger companies export the raw metal for processing overseas.

Biggest Plant

Geo Professional Services Ltd., a closely held Russian company, is raising the money and building the plant, set to be the biggest in West Africa, he said. PMMC will supply the land and the raw metal and get 40 percent of earnings, Damtey said.

Gold has gained 4 percent in the past six months amid concern about an ongoing debt crisis in Europe and a slow economic recovery in the U.S., the world’s biggest economy. Spot gold rose less than 0.1 percent to $1,668.90 an ounce by 9:38 a.m. in London.

In the first three quarters of 2012, Ghanaian small-scale miners produced 937,562 ounces, 30 percent of total output in the period, Aryee said.

Production probably increased to 3.9 million ounces by end of 2012 from 3.6 million ounces in 2011 as higher prices prompted expansion by both large and small-scale mining companies, according to the minerals commission. Figures for last year haven’t been announced yet. 

--Editors: Emily Bowers, Ben Holland

To contact the reporter on this story: Ekow Dontoh in Accra at edontoh@bloomberg.net

To contact the editor responsible for this story: Emily Bowers at ebowers1@bloomberg.net 

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