Ghana provides a lesson in how not to nationalise a gold mine

The press release containing the government of Ghana’s decision not to renew Gold Fields’ license for the Damang mine had a revolutionary tinge to it.

Gold Fields’ is Ghana’s third and the world’s seventh largest gold producer, a big player by all standards.



The government described as “colonial” the current culture of treating such license renewals as routine. Then it started to wax lyrical about a new age of resource nationalism in which Ghana’s natural resources shall be be leveraged solely for national interest.

In these days of large countries beating their chests loudly about putting national interests first, and Ghana’s neighbours to the north asserting their control over their mines against multinationals, the government’s rhetoric shall no doubt find many receptive ears.

It is one thing, though, to nationalise gold mines, assert resource sovereignty, and show multinational companies like Gold Fields who is boss, and another thing entirely to actually do any of these things well.

Regardless how different citizen groups might view the decision not to renew the license and instead to nationalise the mine and send soldiers to assume control, what every Ghanaian can hopefully agree with is the need for the government to show coherence of strategy and competence in execution.

Countries like Malaysia, the UAE, China, Singapore, and others that have shown tremendous ability to assume control of their national resources and develop autonomous capabilities, often in the face of competition with western multinationals, all have one thing in common: they think through their policies, try to apply robust data and market intelligence, and execute their plans with considerable diligence.

It is also perhaps worth reminding the public of Ghana’s checkered history of nationalisation. Throughout the 1960s, mine nationalisations proceeded apace. By 1972, all gold mines in the country were vested in the State Gold Mining Corporation.

Throughout the 1950s and 1960s, the gold price remained stagnant, shifting by barely two dollars over two whole decades. The lack of price growth affected investment. Underinvestment was in turn exacerbated by a healthy dose of mismanagement and by 1973, Ghana’s gold sector was in decline. The country, which had always been in the top 5 global producers of the precious metal since the mid-60s, dropped out of the top 10 in the early 1980s. To underline that trend, production plunged from more than 912,000 ounces in 1964 to just a little over 216,000 by 1983 read more....