President of the Ghana Chamber of Mines, Michael Edem Akafia, says the recent surge in global gold prices presents both opportunities and challenges for mining companies in Ghana, as persistent production struggles weigh on the sector.
Speaking on Joy News’ PM Express Business Edition last Thursday, he explained that while higher gold prices may seem like a windfall, they come with hidden pressures that many outside the industry often overlook.
“Generally, you would say that higher prices should be good news. But like all things, there are two sides to it the upside, which everyone talks about, and the downside, which is not often considered,” he said.
Costs Rise With Gold Prices
Mr. Akafia noted that rising gold prices often translate into higher costs for mining firms, leaving margins narrower than expected.
“When people look at the gold price alone, that doesn’t tell the full story. Because in periods like this, input prices are almost immediately adjusted upwards, as suppliers factor in the higher gold price when setting their own pricing,” he explained.
He added that companies are sometimes forced to mine marginal reserves at higher costs to avoid leaving parts of concessions unutilised.
“When the gold price goes up, you may be required to mine some of your marginal areas. Otherwise, you risk sterilising your mine. But mining those portions comes at higher cost, which means your margin isn’t as large as people assume.”
Stagnant Large-Scale Production
The Chamber of Mines president expressed concern about stagnating production levels among large-scale miners, which have remained at 2.9 million ounces despite growth in small-scale output.
“Small-scale production jumped from 1.1 million ounces to 1.9 million ounces. But for large-scale players to remain at 2.9 million ounces tells a story one that speaks to the challenges the industry faces,” he said.
Weak Exploration Pipeline
Mr. Akafia also highlighted the limited pipeline of new exploration projects as a warning sign for the future of the sector.
“One of the big indicators of what the future holds is the pipeline for exploration projects. And if you compare Ghana to other mining jurisdictions, you’ll see why we may face challenges if we don’t address this gap.”
Critical Role in Ghana’s Economy
Despite the challenges, he stressed that the mining industry remains vital to Ghana’s economy, especially through its collaboration with government on strategic programs.
“As a chamber, we continue to work in partnership with government. One visible example is the currency’s recent performance, which has been supported by the gold industry through two key initiatives the gold purchase program and related measures,” he said.
