October 2003: Canadian Mining Companies Set to Destroy Ghana's Forest Reserves

October 1, 2003

Under pressure from Canadian and U.S. mining companies, the Ghanaian government seems ready to pass legislation in June 2003 which will open the country's protected forest reserves to mining. The companies' bulldozers are ready to rip apart thousands of hectares of rainforest in the Ashanti, Eastern and Western Regions if the government gives them permission. The targeted areas include the Subri River Forest Reserve (the biggest in the country), the Supuma Shelterbelt, the Oppon Mansi, Tano Suraw and Suraw Extension Forest Reserves.

Mining has already destroyed most of Ghana's forest cover and only 12% of this remains. At independence in 1957, Ghana had a forest estate of about 8.3 million hectares of which only 1.2 million is left today. Ten to twelve thousand people depend on the forest reserves directly for their food and livelihood. Rivers and streams in the reserves feed into major rivers that supply water to many villages, towns and cities. Mining's required use of toxic chemicals will destroy the water bodies that provide drinking water for millions of people. The forest reserves are also considered globally significant for their biological diversity; they contain over 700 types of tropical trees and many endangered species including 34 plants, 13 mammals, 23 butterflies and 8 birds.

Thirteen Ghanaian human rights, labour and environmental groups have combined to oppose mining in the forests. As George Ahadzie, Executive Director of the GreenEarth organization put it, "Even our very opportunity to exist as humans depends on the capacity of the forests to support living things, but that capacity in this country continues to be threatened and damaged in many instances beyond its ability to regenerate. We need to understand that short term economic gain is not a responsible choice nor is it sustainable, we need to understand that real economic prospects are all tied in and dependent on the care and preservation of our natural resources." Ahadzie fears that surface mining in the forest reserves will mean the death of the rest of the country's forests and wildlife, and the impoverishment of local communities.

Canadian Companies

The five companies lining up for licenses to mine the forest reserves are Newmont, Nevsun Resources, Birim Goldfields, Chirano Goldmines, and Satellite Goldfields. Nevsun and Birim are Canadian and Birim has sold its forest property to Golden Star Resources, also Canadian. Birim will continue to get royalties from gold production on the property. Similarly, Nevsun has handed over management of its forest reserve property to Ashanti Gold Fields from which it will also receive production royalties. On April 16, 2003, Birim announced the sale of its Dunkwa property to Golden Star for U.S.$3.4 million in cash and a 2% to 3.5% royalty depending on the gold price and amount of gold found. The US$3.4 million is an advance royalty on the first 200,000 ounces of gold recovered from the Mampon deposit on Dunkwa. Mampon is located in a forest reserve and contains an "initial resource"of 700,000 ounces of gold. Gold production at Mampon exceeding 200,000 ounces and any additional production from other deposits on the Dunkwa property will be subject to the sliding scale royalty.

According to Birim, Golden Star plans to develop an open pit mining operation at Mampon. As Birim puts it: "Now that the Government of Ghana has given its blessing with regards to mining within productive forest reserves, Birim expects the development of the Mampon gold project to proceed swiftly. Birim views the decision to allow mining activities within production forest areas as a very positive and significant development which will enhance its commitment to gold exploration and development in Ghana. The preproduction royalty associated with the permitting of the Mampon project, along with additional future production royalties, will set the stage for the sustained exploration of the Company's significant land holdings within Ghana on the Bui structural belt and the undeniably prolific Ashanti belt."

Birim and 13 other companies have been exploring within forest reserves in Ghana since 1995. Their activities stopped during 1996-97 when the Ghanaian government imposed a moratorium on mineral exploration in forest reserves. The government wanted to create guidelines controlling access to and exploration in the forest reserves. The moratarium was lifted in February 1998 and in December 2001, the government allowed the companies to start environmental studies, the final step before the the application for a mining permit.

Golden Star refers to Mampon as "one of five projects identified by Ghana Government as eligible for a mining permit subject to normal permitting procedures and a site inspection." According to Golden Star, there is "significant potential" to set up open pit and underground reserves at Mampon. The company estimates Mampon's probable mineral reserves to be 234,162 ounces of contained gold. Golden Star's imminent entry into Ghana's forest reserves comes after its mining operations have already spread massive disaster in another poor country. In Guyana, the company owned 30% of the Omai gold mine which caused reportedly the biggest cyanide spill in world history. On August 19, 1995, the tailings dam at Omai burst, sending four billion litres of cyanidefilled mud into the Essequibo, Guyana's main river and its most important source of fresh water. The government declared a national emergency. Residents of the river communities reported thousands of dead fish in the Essequibo River and the PanAmerican Health Organization concluded that the Omai River (on which the mine was located) "was a dead river." The residents depended on the rivers for fish and water, and both necessities were denied by the spill. The spill also destroyed crops and farms and was followed by an increase in health problems. Many residents complained of skin rashes and gastrointestinal illnesses. Golden Star's partner Cambior Inc. (based in Montreal) which owned 65% of the Omai mine, was sued in Canada for $69 million by 23,000 Guyanese residents. The case was referred back to Guyana.

Golden Star already has experience in forest mining to the detriment of the communities affected: the company has operated in the rainforests of Suriname and Guyana where it has been involved in conflicts with indigenous groups whose land it has attempted to explore without their permission. In the case of the Saramaka Maroon community of Nieuw Koffiekamp in Suriname, the World Council of Indigenous Peoples (WCIP) reported in 1996 that "members of both the police and Golden Star's private security force have been implicated in threatening, harassing and intimidating members of the community. ... On a number of occasions [police and security force] patrols shot live ammunition at or over the heads of Nieuw Koffiekampers. ... Many of those who have been shot at were doing nothing more than tending their agricultural plots and gathering food in the forest."

Nevsun owns the Kubi Mine in Ghana part of which is in a forestry reserve. Nevsun has handed over management of Kubi to Ashanti Goldfields Company. Under an agreement, Ashanti paid Nevsun U.S.$1.8 million for the first 60,000 ounces of gold mined from Kubi. For additional gold recovered, Ashanti will pay a U.S.$15 per ounce royalty. Ashanti is also allowed to develop underground resources at Kubi. Open pit mining at Kubi started in 19992000 and about 30,000 ounces have been mined. Ashanti is now waiting for official permission to extend the pit into the forestry reserve.

The five corporations seeking licences have pledged to invest $2 billion in mining the forest reserves and claim to have spent $10 million on exploration which they say identified "staggering volumes"of gold deposits. As a spokesman for the companies explained "We have to recoup our money...we want the government to grant us permits to throw out the trees and the animals in the forest reserves to make way for fullscale surface mining operations." The $2 billion is important to the Ghanaian government because since 1998 only "a handful"of new mines have opened as compared to dozens during 1990-95. The government is also concerned with the companies' threat to relocate to countries with friendlier regulations and to pursue legal action if denied entry to the reserves. The corporations have made it clear that Ghana's reputation as an attractive site for foreign investment depends on whether the government will allow them to mine the forests. The companies have also unleashed a barrage of pro-mining propaganda and pledged material aid to persuade the public. But as Akosua Birago, a 62-year old farmer at Abekoase in the Western Region, put it "We have heard it all before. They came with all sorts of promises, but we saw nothing. They devastated our lands and livelihoods and showed little respect for civil rights. Our villages have already been so rapaciously deforested by mining, and the health and the quality of remaining forests continue to decline, and now they are asking for the forest reserves; do they think Ghanaians wash their faces from their chin upwards?"

Aside from Golden Star, Birim and Nevsun there are eight other main Canadian mining companies in Ghana: IAMGOLD Corporation, St. Jude Resources, AMI Resources, PMI Ventures, Moydow Mines, Akrokeri-Ashanti Goldmines, AXMIN and Alcan Aluminium. All these are gold exploration/production companies except for Alcan which is mining bauxite. IAMGOLD owns 18.9% of the Tarkwa mine (with Gold Fields Limited of South Africa owning 71.1% and the Government of Ghana, 10%) the biggest gold producer in Ghana (for more on the Tarkwa mine see below). Akrokeri-Ashante owns the Bonte Mine, which has the sixth largest gold output in the country. Alcan is the main bauxite miner in Ghana. Canadian firms have invested over $200 million in mining in Ghana, largely in the gold and bauxite sectors and more than half the 200 active concessions in Ghana belong at least in part to Canadian companies. Mining has led to massive human rights violations and enormous environmental degradation in areas of Ghana where Canadian companies operate.

Gold for Multinationals

Gold mining is Ghana's main source of revenue and foreign exchange. In 1998, gold exports totalled $793 million which was 46% of gross foreign exchange earnings. Under a World Bank-IMF Structural Adjustment Program (SAP) beginning in 1986, there has been massive privatization of the mining sector accompanied by generous incentives for companies which include the repatriation of up to 95% of their profits into foreign accounts and the ending of income tax and duties. Environmental regulation has been minimized. Such a favourable investment climate has attracted multinational corporations and boosted production. Seventy to 85% percent of the large-scale mining industry is now foreign owned (the government owned 55% of all mining companies before 1986). Ghana is now Africa's second largest producer of gold after South Africa and gold constitutes more than 90% of the total value of minerals output. Gold production reached a record high in 1995 and has since gone up by a further 45%.

All this has not benefited the Ghanaian economy and people. As a recent study of SAPs states: "liberalization, deregulation and privatization of the mining sector have enabled transnational corporations to remove resources and profits from poor countries while failing to generate sustainable economic growth that is of net benefit to national or local economies." Due to the tax breaks and incentives given to foreign companies, mining's net foreign exchange contribution to Ghana's economy has been minimal. The sector's contribution to government revenue has also been small at 14.4% in 1995. Mining's ability to generate employment is also limited given that all operations are of the surface mining kind which is capital intensive. The sector employs about 20,000 people but privatization and the decline in commodity prices has led to cost cutting which has meant massive layoffs; many mines substantially reduced their labour force particularly during 1997-2000. At the same time mining has caused high unemployment in surrounding communities by taking away large tracts of land from farmers and not providing enough jobs to make up for the number of people laid off from agriculture.

Human rights and environmental groups have denounced "a pattern of abuse by mining companies that includes burning villages, illegal detention, rape, intimidation and dog attacks on villagers." A recent fact finding mission carried out by Ghana's Human Rights and Administrative Justice Committee in the Wassa area confirmed reports of "arbitrary arrests, violations of the right of access to food, forceful evictions, inadequate compensation and demolishment of villages." The government body found "overwhelming evidence of human rights violations occasioned by the mining activities which were not sporadic but a well established pattern common to almost all mining communities."

The district of Tarkwa which contains half of Ghana's large mines shows the enormous social and environmental impact of the gold boom. Mining here displaced 30,000 people during 1990-98, contaminated rivers and streams and destroyed farm and forest lands. Air and water pollution stemming from mining operations in Tarkwa have spread malaria, tuberculosis, silicosis, acute conjunctivitis and skin diseases. Two-thirds of the land in Tarkwa has been sold off to multinationals with minimal compensation to local owners. The dislocation effects "every aspect of the social fabric" and has led to high levels of prostitution, a rise in the incidence of AIDS, family disorganization and unemployment as people lose their farms.

Tarkwa Mine

The operation of the Tarkwa gold mine which is partly owned by the Canadian company IAMGOLD has led to significant human rights violations and enormous environmental destruction. In December 1999, police shot and wounded nine people during demonstrations against the lay off of 1,000 workers at the mine by IAMGOLD's partner, Gold Fields Limited (the mine was 18.9% owned by Repadre Capital Corporation of Toronto at the time; Repadre merged with IAMGOLD effective January 7, 2003). The mine has caused the forceful removal of at least 20,000 people from their homes. Gold Fields has also prevented more than 4,000 members of the Atuabo, Mandekrom and Sofo Mensakrom communities from farming land. According to the Third World Network - Africa, "Villages which have protested have been attacked by mine security and state police. One such community is Nkwantakrom where 52 mine security and 15 policemen demolished an entire village under the pretext that the settlement is illegal. The fact is that the villagers had complained to the company about their polluted water source."

In October 2001, the Tarkwa mine caused Ghana's worst environmental disaster. A tailings dam at the mine burst sending thousands of cubic metres of mine wastewater into the Asuman River contaminating it with cyanide and heavy metals. "Virtually all life forms in the river and its tributaries were killed" and a thousand people lost access to drinking water. Hundreds of dead fish, crabs and birds lay on the banks of the river and floated on its surface. According to scientists, the cyanide and heavy metal residue from the spill could remain for decades threatening human health and the environment. Daniel Owusu Koranteng, executive director of the local mine watch organization Wassa Association of Communities Affected by Mining (WACAM) said at the time: "People in the villages of Abekoase and Huni have lost their clean drinking water and their livel
hood as they can no longer sell or eat produce from their farms through which the river runs. Gold Fields should not hide from their responsibility for damages, we need to demand compensation for those directly affected by mining disasters."

In January 2003, another spill seemed to have occurred when water from an abandoned underground mine at Tarkwa seeped into the Asuman River arousing fears of contamination and severe health impacts. Residents said the water, which they suspected was contaminated, filled the mine shaft and flooded the Asuman River. The people of Abekoase remembered the 2001 spill and once again stopped fetching water from the river.

Ironically, the World Bank which pushed Ghana to hand over its mining sector to foreign corporations and to increase extraction and exports has itself admitted the failure of this strategy. A recent study by the Operation Evaluation Department (OED) of the bank reviewed its policy towards six countries, including Ghana from 1993 to 2002. The study concluded that the risks and costs of developing the mining sector "outweighed potential benefits." The risks included "long term environmental damage with accompanying health consequences, the destruction of the traditional (and more sustainable) economic foundations of local communities," forced resettlement and increased corruption. The study adds that because minerals like gold "are limited and non-renewable their exploitation cannot be a long-term base for developing the economy."

(Asad Ismi has written extensively on global economic and political issues. For more of his reports and articles, visit www.asadismi.ws)