Planned sale of Newmont’s Akyem gold mine is legally flawed – IEA

The Institute of Economic Affairs (IEA) has strongly opposed the planned sale of Newmont’s Akyem gold mine to China’s Zijin Mining Group for $1 billion.

The IEA says the sale undermines Ghana’s economic interests and violates key terms of the mine’s lease, which expires in January 2025.

In a press release dated Monday, October 21, 2024, the IEA highlighted that the original lease agreement required government approval for any transfer of ownership, and that there is no record of such approval.

Furthermore, the Institute emphasized that Ghanaian investors should be given priority, in line with President Akufo-Addo’s previous statements on keeping mineral resources in local hands.

Citing shortcomings in the original contract, including inadequate royalties and taxes, the IEA called for the sale to be blocked and for Parliament to reject it.

They emphasized the importance of national ownership in the mining sector to ensure long-term economic benefits for Ghana.

The IEA warned that allowing the sale would reflect colonial-era contracts that favored foreign interests and left Ghana with minimal returns.

They advocated public-private partnerships (PPP) as an alternative solution to keep control of the mine in Ghanaian hands.

“The IEA would like to state categorically that Newmont’s alleged sale of the Akyem gold mine to Zijin is unjustified and legally defective and therefore should not be ratified by Parliament,” the IEA said.

“Allowing Zijin to purchase the mine for $1.0 billion, which would accrue to Newmont, and presumably only making Zijin pay royalties and taxes to Ghana would substantially shortchange the country,” it added to.

The IEA also recommended that Newmont sell the Akyem gold mine to Ghanaian investors to ensure that the wealth generated from the mine remains in the country.

The statement also suggests a public-private partnership (PPP) between the government and the local private sector to purchase the mine if necessary:

“If Newmont wants to sell the mine, it should sell it to Ghanaian investors so that the wealth generated remains in Ghana for the development of the country”

The IEA proposes to amend Article 257(6) of the Constitution, which currently vests control of Ghana’s natural resources in the hands of the President. The Institute suggested that resources should instead rest with the state, and that all major contracts should require parliamentary ratification.

“The natural resources should rather be vested in the state and any contract should require parliamentary ratification, in accordance with Article 268(1) of the Constitution.”