Dumsor: Mines spend $1bn in 3 yrs

• Posted on June 10, 2016
• by Nana Kwesi Coomson
• Comment

Within a space of three years, the mining industry in Ghana has spent a whopping $1.2billion in procuring electricity from the national grid for its operations, Business Finder’s checks have revealed.

In 2015 alone, the industry coughed $314million to pay for electricity. The amount translates into 10 per cent of total mineral revenue earned that year.

The Chamber of Mines revealed last week that mineral revenue of its members fell nearly by 14 per cent to $3.39billion in 2015, down from $3.94billion in 2014.

President of the Chamber, Kwame Addo-Kufuor told guests at this year’s West African Mining and Power Conference (WAMPOC) that “Expenditure on electricity and diesel in our member companies has increased from 17 per cent of mineral revenue to 20 per cent and so for many operators in Ghana power is the key expenditure item followed by salaries and fuel.”

This paper’s checks revealed that operators in the industry spent $306million in 2014 representing 8.3 per cent of mineral revenue for that year while in 2013 they paid as much as $403million (9 per cent of revenue ) for electricity.

Mining companies, he noted rely heavily on power to achieve operational goals. Thus reliable power supply goes a long way to boost productivity and efficiency of business processes on all mines.

According to Mr Kufuor, in spite of measures being instituted to improve the supply of power to mines in Ghana, many mining companies were still grappling with unstable supply and high cost of power.

Describing the hikes in expenditure on power supply as a major bane to the sector, Mr Kufuor called for bold, effective and lasting solutions to the country’s energy crisis to enable the industry operate better.

Challenges which continue to militate against the prospects of the mining in Ghana include fluctuations in metal prices, unreliable power supply, and sudden significant increment in prices of fuel products.

He observed that the theme of the conference, ‘Sustaining Mining and Power Investments: Meeting stakeholder expectations in a challenging global environment’ captured the very essence of the present challenges that confront the mining and power sectors worldwide.

“This theme reinforces the need for businesses in the Mining and Power sectors to remain viable in the face of economic challenges whilst contributing to the transformation of the sub-region,” he pointed out.

The President of the Chamber however noted that the challenges presented opportunities, noting that in Ghana questions abound about where the future growth from mining will come from and which sector will take over from the mining industry as the engine of government revenue if “we don’t address the challenges.”

In spite of the challenges, recent developments in the sector offer hope to businesses as commodity prices seem to trend generally upwards.

“It is our expectation that this new era will bring more stability to the industry and it will be marked by greater operational efficiency and improved productivity,” he said.

According to him, globally, there is a tilt towards the use of renewable power as a result of the consequences of global warming and climate change.

The development and use of renewable energy resources had the potential to ensure Ghana’s energy security and also mitigate the negative climate change impact on energy production.

“It is time Ghana considers the new sustainable energy supply to its industries,” he said.

In the face of the challenges, the mining sector continues to contribute significantly to Ghana’s economy.

In 2015, the players in the sector returned $2.6bilion representing 85 per cent of total realised mineral revenue to government.

Within the same period, member companies of the Chamber of Mines spent $865million representing  28 per cent of mineral revenue on local purchases.

By Isaac Aidoo