Soaring Gold Prices Hide Mining Firms’ Struggles — Ghana Chamber of Mines Reveals Why Profits Don’t Match Expectations
Accra, Ghana — Despite record prices for gold on the global market, many mining firms in Ghana aren’t enjoying the windfall most expect. The President of the Ghana Chamber of Mines, Michael Edem Akafia, speaking on Joy News’ PM Express Business Edition, says high gold prices often mask deeper systemic challenges impacting profit margins and production.
Key Factors Behind the Paradox
-
Rising Cost of Inputs
As gold prices soar, the cost of essential inputs — fuel, chemicals, labor, logistics — also increases. Mining firms are compelled to pay more for almost every aspect of their operations, sharply reducing their net profits. -
Exploitation of Marginal Areas
When market prices go up, firms often push into less profitable or marginal parts of their concessions. These areas cost more per ounce to mine, lowering the return on investment. -
Production Growth Bottlenecks
Large-scale mining output in Ghana has remained essentially flat — around 2.9 million ounces — even as small-scale mining output has nearly doubled. -
Weaker Exploration Pipelines
The future of the sector looks constrained by a lack of strong exploration activity. Without new discoveries, current mines will eventually run dry, and Ghana’s long-term gold production could decline.
What’s Being Done
Akafia noted that the Chamber of Mines is collaborating closely with the government to explore interventions. One such program is the gold purchase programme, along with discussions about tax policy reforms to make mining more sustainable.
The sector continues to make essential contributions to Ghana’s economy — particularly in stabilizing the cedi and earning foreign exchange. But Akafia stressed that without addressing rising operational costs, tax burdens, and weak exploration activity, the sector’s potential gains will remain limited.
Source: My News Ghana
