Bloomberg News

Ghana’s Gold Sparks Conflict With Illegal Chinese Miners

October 08, 2012

Ghana Gold Rush

A boy sits beside the pit of an illegal gold mine collapsed at Dunkwa on-Offin, Ghana, on June 27, 2010. Photographer: Adadevoh David/AFP via Getty Images

When a patch of land on the edge of Nweneso No. 1 village was bought by a Ghanaian who said he wanted to search for gold, few residents objected. Then dozens of Chinese moved in with excavators, wrecking farmland and turning the local stream into a trickle of mud.

“The Chinese destroyed our land and our river, they are sitting there with pick-ups and guns, plenty of guns,” Maxwell Owusu, acting chief of the village in the central Ashanti region, said last month. “They operate big machines and it makes it very difficult to reclaim the land for farming when they are done.”

As global gold prices climb amid economic uncertainty in Europe, Ghana is facing an influx of illegal small-scale miners from China using machinery villagers say they can’t afford. The operations are raising concern over environmental damage in Africa’s second-biggest gold producer and sparking anger among Ghanaians who say they sold their farmland without knowing Chinese gold miners would move into camps nearby.

When the Chinese miners are preparing to depart to sell their gold in Ashanti regional capital, Kumasi, they fire their weapons into the air to ward off potential highway robbers, Owusu said.

The inspector-general of police set up a committee in August with the Ministry of Natural Resources and the Minerals Commission to investigate illegal mining. About 20 Chinese miners arrested without residential and work permits will be tried soon, said Frank Koffi, operations director of the Criminal Investigation Department. Thirty-eight were deported last month, China’s embassy in Ghana said in a statement on its website dated Sept. 30.

‘Environmental Devastation’

“The involvement of the Chinese has changed the dynamic of small-scale mining,” Toni Aubynn, head of the Ghana Chamber of Mines, said in an interview in the capital, Accra. “They use bulldozers, pay loaders and really heavy machinery. They have in fact mechanized artisanal mining and as a result the level of environmental devastation is huge.”

The biggest gold companies operating in Ghana are Greenwood Village, Colorado-based Newmont Mining Corp. (NEM:US), which is developing its second mine in the country, and Johannesburg’s AngloGold Ashanti Ltd. (ANG) and Gold Fields Ltd. (GFI) The price of gold more than doubled since 2008. Gold for immediate delivery traded 0.4 percent lower at $1,774 an ounce at 3:03 p.m. in London.

Small-scale mining is reserved for Ghanaian nationals as the law allows foreigners only to provide goods and services to Ghanaian miners. Chinese-made gold mining equipment has quickly become popular in mining towns including Tarkwa, which is near Ghana’s biggest gold mine, run by Gold Fields.

Small-Scale Miners

“They haven’t encroached upon our mines yet, but of course we are aware of the problem because the Chinese operations are relatively big and it’s clear that they cause a lot of damage,” Peet van Schalkwyk, executive vice president for West African operations at Gold Fields, said in an interview in Tarkwa on Sept. 14.

About 30 percent of Ghana’s total output is produced by an estimated 1 million small-scale miners who use shovels and picks, according to the Chamber of Mines, which has asked the government to tighten industry regulation. Output is expected to reach 3.9 million ounces in 2013 from 3.6 million ounces this year, said Benjamin Aryee, chief executive officer of the Ghana Minerals Commission, the industry regulator.

Often, Ghanaians secure plots of land and partner with Chinese who have funds to “bring in the bulldozers and all the other big equipment, and then they go in some sort of working arrangement with the local miners,” said Aubynn.

Chinese Trade

The Chinese sell small rock-crushing machines, known as Shang Fa, at about 1,700 cedis ($897) each, and run large operations in the Ashanti and Western regions, notably on the Ankobra river, which shows signs of heavy pollution, according to Van Schalkwyk.

Ghana has a fast-growing Chinese population, with Chinese shops and restaurants cropping up in the Ashanti Kumasi. Bilateral trade between the two countries jumped to $3.47 billion last year from $2 billion in 2010, according to the website of the Chinese Embassy in the capital, Accra.

In July, Chinese men mining near the village of Manso- Nsiana fired warning shots when residents protested their presence, Koffi said. He couldn’t confirm a report published in Accra’s state-owned Daily Graphic newspaper in July that two Chinese nationals have been killed this year in a mining dispute.

No one answered the phone at the Chinese embassy in Accra when calls were made last month and Oct. 5. A request made in person to speak with the secretary of the ambassador was declined on Sept. 18. A written request to speak with the ambassador, delivered at the embassy on Sept. 20, wasn’t answered.

Muddy Pits

In Nweneso No. 1, two separate groups of Chinese men arrived “led by Ghanaians” about three months ago, acting chief Owusu said. They set up wooden barracks on the edge of the village, barred entry with a bamboo pole and used excavators to unearth muddy pits of at least 10 acres (4 hectares) each in what used to be palm-oil and cocoa plantations.

In Nweneso No. 2, the adjacent village that’s connected by a bumpy, unpaved road, young men used sticks and machetes to chase away a small group of Chinese miners who had shown interest in the area, Tony Yeboah-Asare, the head of the village assembly, said in an interview.

Enforcement Agencies

“We will do everything to protect our land from the Chinese,” he said, preparing to plaster walls and electricity poles with warning notices from the Minerals Commission explaining that land is not to be bought or sold without government approval.

Better checks on visa applications and cooperation by local residents with law enforcement agencies is needed, Foreign Affairs Minister Alhaji Mohammed Mumuni told reporters on Sept. 20.

“In some areas, there is some kind of unholy alliance between some of these aliens and our own citizens,” he said. The illegal mining “is affecting our environment in a very deleterious way and we need to work hard to stamp it out.”

To contact the reporter on this story: Pauline Bax in Accra at pbax@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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