Ghana Becomes Top Gold Producer, Overtaking South Africa

According to a report by Bloomberg, Ghana has overtaken South Africa as continental leader in gold production, making South Africa Africa’s second-largest gold producer.

South Africa’s gold production output is shrinking as operators capitulate to stubbornly high costs, regular strikes and the geological challenges of tapping the world’s deepest mines, whiles Ghana is benefiting from lower-cost mines, friendlier policies and new development projects.

The report stated that South Africa’s industry stalwarts AngloGold Ashanti Ltd. and Gold Fields Ltd. were shifting their focus to other countries – including Ghana, where deposits are cheaper and easier to mine.

The largest remaining gold miner in South Africa, Sibanye Gold Ltd., is cutting thousands of jobs and diversifying into platinum-group metals as it struggles to contain costs, the report said.

Citing figures from the Ghana Chamber of Mines and the Minerals Council of South Africa, the report said Ghana produced 4.8 million ounces of gold in 2018 as opposed to South Africa’s 4.2 million ounces.

The report further said that Ghana Chamber of Mines reported gold output jumped 12% in 2018.

Small producers account for the largest share of the total, although the nation also hosts some of the world’s biggest gold miners, including No. 1 producer Newmont Goldcorp Corp. While Newmont is exploring in Ethiopia, Ghana is the only place in Africa where it operates.

The report predicted that Ghana’s output would get a further boost when AngloGold Ashanti’s Obuasi operation, previously overrun by illegal miners, restarts later this year.

It also forecasted Obuasi’s production at 350,000 to 450,000 ounces of gold annually during the first 10 years.

The Obuasi operation “will be an engine for growth” for AngloGold, CEO Kelvin Dushnisky said in September. The company is investing as much as $500 million to revive the mine, it said.

According to Bloomberg, Gold Fields, which has operated in Ghana for 26 years, says authorities there understand what makes for a “sound” business environment. The country cut corporate taxes in 2016 and in 2017 changed Gold Fields’ mineral royalty to a sliding scale based on the gold price, from a 5% flat rate.

“The government of Ghana’s 10% free-carry stake in all mining companies provides a level of security to the investment,” said Sven Lunsche, spokesman for Gold Fields.

Credit: Bloomberg