The country is looking to explore what would probably be the biggest infrastructure program in its history, coupled with an annual 10-billion dollar boost to the economy through value addition to its bauxite resource in a planned Integrated Aluminium Industry (IAI).
Ghana’s IAI involves an infrastructure program that will result from the exchange of refined bauxite for infrastructure, and will most likely be “the largest infrastructure program in the country’s history,” says Nana Akufo-Addo, the President of Ghana. The country will, thus, be paying for this huge infrastructure program with its bauxite, to which extent, Government has signed an agreement with China which may conclude in the development of a US$ 10 billion bauxite project with the construction of alumina refineries and railways.
The annual $10bn to the economy is to come from bauxite mining, refining, and smelting operations as well as contributions from the downstream and allied industries. The venture is also expected to attract foreign direct investments, support massive infrastructure development including roads, schools, and hospitals, as well set the basis for an industrialized economy.
With an estimated 900 million metric tonnes of bauxite in reserves, Frema Akosua Osei Opare, Chief of Staff, believes the IAI Project has the needed environment to succeed with the availability of “large natural gas reserves to power our industries, an existing smelter, expanded ports as well as significant quantities of industrial salt.” She is convinced that the country can prop itself up on this resource, using it to build a buoyant integrated aluminum industry that will employ thousands of Ghanaians.
Currently, estimates suggest about 60 million tonnes of bauxite in Awaso with the Nyinahin and Kyebi sites having 700 million tonnes and 160 million tonnes each. Though bauxite was discovered in the country over a century ago, the little benefit has been derived from it, with an industry that can only boast of a single under-performing smelter – the Volta Aluminium Company (VALCO) and scattered enterprises in the value chain.
However, the Akufo-Addo-led government in mid-2017 revived efforts toward the industry in an integrated form, and hence set up the Ghana Integrated Aluminum Development Corporation (GIADEC) to oversee, participate in and ensure the integration of local business and labor in the aluminum industry.
As a critical stepping stone to realizing a ‘Ghana Beyond Aid, the government established GIADEC in August 2018 with a mandate to promote and develop an Integrated Aluminium Industry in the country. It will assume all state interests across the value chain in the Industry and will, thus, hold a minimum 30 percent stake in any new mine, refinery, or smelter together with private investors.
The Corporation, in partnership with selected private investors, plans to get four mining concessions (one in Awaso already in operation plus up three additional – two in Nyinahin and one in Kyebi) with a combined production of about 20 million tonnes of bauxite a year and three refineries with a combined capacity of four to six million tonnes of alumina, that is, refined bauxite, says Michael Ansah, Chief Executive Officer (CEO) of GIADEC. He anticipates the industry to bring about 35,000 new jobs – 10,000 direct and 25,000 indirect.
VALCO is also going to get a retouch to increase its production capacity to 300,000 tonnes of aluminum with the concurrent establishment of two smelters with a combined production capacity of up to 500,000 tonnes of aluminum. To this effect, the Corporation began a competitive bidding process to attract worthy investors and has seen expressions of interest from over 40 multinational companies.
Despite the numerous benefits that the industry is to bring with assurances of responsible mining, activists still voice lingering environmental concerns of soil erosion, noise and air pollution, destruction of the ecosystem, and threats to taking from the earth.
The Volta Aluminum Company (VALCO), the largest aluminum company in Ghana, was founded in 1961 with a smelting capacity of 200,000 metric tonnes per year of ingots. The 600-acre smelter currently consumes about 3.5% of total electricity generated with power making up about 34% of the total operational cost at five (5) cents/kWh. Aside from the cost, the company has had to battle insufficient and erratic power supply which increases the inefficiency of the plant as well power costs per unit of output.
Ministry of Finance (2016) data shows VALCO’s non profitability hit an average loss of 19 million dollars between 2014 and 2016, mostly owing to the high cost of power. Indicatively, for VALCO to operate optimally, it requires greater stability and efficiency in the supply of power.
Meanwhile, bauxite ore is currently produced in the country solely by the Bosai Minerals Group, a Chinese firm with an 80 percent stake in the Ghana Bauxite Company, and the government in charge of the remaining 20 percent. A present obstacle for the industry is the poor condition of the country’s railway system which state will highly determine the IAI’s realization.
Though the project is significant, Civil Society Groups have advised the government to find other sources of financing for development projects in the country and have also urged leaders to consider recycling Aluminium as an integral part of the IAI as well as to live up to its promise of not compromising the quality of the environment.