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Ghana stakes future on gold
October 5, 1996
Web posted at: 7:55 p.m. EDT (1155 GMT)From Correspondent Gary Strieker
OBUSAI, Ghana (CNN) -- Let other countries chase after computer companies and other high-tech industries.
In Ghana, a poor West African country near Nigeria, the leaders see a glittering future in gold. As in the past, gold is once again the driving force in the economy of this land once known as the Gold Coast.
"Gold has overtaken cocoa as our main foreign exchange earner. And there's room for so much more," Ghanaian President Jerry Rawlings said.
Most of the world's major gold mining companies are already in the country, digging, prospecting or negotiating with the government for rights.
Gold fever is boosting mining operations across West Africa, but particularly in Ghana, a formally Socialist country of 18 million people that is being transformed into a haven for private investors.
"The numbers of people and the types of companies show that we are being taken seriously," observed Cabinet Minister Richard Kwame Peprah.
Ghanaian gold is sought after for two major reasons: There are proven reserves, and reforms in Ghana's investment code translate into lower mining costs and higher profits.
"The fundamental change has really been the change in the investment rules in conjunction with the increase in the political stability of Ghana," said Colin Smith of Ashanti Goldfields Corp., the leading mining company.
In Africa, Ghana is now second only to South Africa in gold output. And while South Africa's production has peaked, Ghana's is growing rapidly. Its total annual output is more than 1.5 million ounces. That's nearly six times the output of 14 years ago.
Ashanti Goldfields has invested $140 million this year in its operations, mostly in the Obasi gold mine, one of the 10 largest in the world. Ashanti has been mining in Ghana for more than a century.
Now privatized and listed on the New York Stock Exchange, the company is developing mining projects in more than a dozen African countries.
"We are actually looking to explore in surrounding countries," Smith said. "We have confidence in the region."
For decades, Ghana depended on cocoa as its biggest export. But that commodity is vulnerable to drought, disease and wildly fluctuating market prices.
The boom in gold mining depends on continuing political and economic stability. The average per capital income still is only about $450 per year.
Many Ghanaians have seen few benefits from economic reforms, and they're waiting for the gold bonanza to trickle down to them.
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