Mining industry looks to increase participation in equities market

The mining industry has begun active engagements with the capital market in a bid to increase local participation in minerals exploration, amid Ghana’s declining competitiveness as a destination for gold exploration.

This has become a major focus of the industry, given the 2020 report of the Chamber of Mines revealing a staggering decline in the country’s competitiveness in attracting new gold exploration investment among its peers in the sub-region.

In 2020, Ghana attracted US$84.4 million in new investment towards exploration for new gold deposits, which was far less than the amounts invested in Cote d’Ivoire, Burkina Faso and Mali respectively. However, compared to the past two years, the country was the recipient of the second largest investment in gold exploration in all of West Africa.

Finding possible solutions to the ebb in Ghana’s mining exploration investment, Chief Executive Officer of the Chamber of Mines, Sulemanu Koney, has revealed that the Chamber has begun actively engaging with the Securities and Exchange Commission (SEC), a regulator of the capital market in Ghana, to use Ghana Stock Exchange (GSE) as a vehicle to drive the agenda of increasing local participation in mining exploration, although it may not be the only resort.

According to the CEO, the industry will explore the use of pensions funds – which is patient capital, to drive this agenda.

“Last year, we began some level of engagements with Ghana Stock Exchange; and we believe we can leverage the GSE for the greater good Ghana when it comes to the mining industry. Because, if you go to Canada, the US, and South Africa; these mining companies have floated shares on these bourses/stock exchanges. It is important that we get there,” Mr. Koney made this known this last week to senior business journalists grouped together under the auspices of Journalists for Business Advocacy (JBA).

“I see a situation where we can even influence policy about our pension arrangements, such that a portion of our pension framework will have a certain percentage, say 2percent to 3 percent, going into mining stocks because that’s our future.

“The reality is that we have pension funds from other jurisdictions coming into our mining industry. Why can’t we think about something the same for ourselves? Because at the end of the day when you are talking about local content; one of the key elements of local content is ownership,” he said.

Mr. Koney added: “We will make sure that we have the necessary conversations and all the downsides being catered for and then hopeful we could get policymakers to sit up to say it is good to have an AngloGold Ashanti and Golden Star Resources are listed on the stock exchange; but it will be better if we start from the base, invest in exploration because at that point when they haven’t made a commercial find; it stands to reason that the price would not be at a premium.”

"In pooling our resources together to be able to go into exploration, we are thinking of using the Ghana Stock Exchange to do this; it may not be the only stock exchange and option.”

The current decline in exploration investment, if not imminently addressed could translate into a similar shift in terms of actual gold production for the country in the future. Last year’s 12.1 percent decline in gold production to 4.023 million ounces, from 4.577 million ounces in 2019 was the sharpest year-on-year production fall since 2003.

Although the decline was underlined by the unusual circumstances resulting from COVID-19 and the effects of Ghana’s ongoing efforts to curb illegal artisanal mining, the fall in Ghana’s competitiveness as a destination for gold exploration, compared to its sub-regional neighbors, is a major concern. Read Full Story