Nearly all the large-scale mining companies who have come to Ghana since the 1980s use the open-pit method of mining in addition to cyanide heap leach operations. These methods have huge consequences for both human health and environmental safety (Akabzaa, 2000). The use of heavy machines in exploiting the minerals also has a destructive effect on flora and fauna as it generates more dust (ILO, 2005) and noise pollutants. While mining projects may have a weak developmental impact on the national economy, they can have a definite impact on the communities in which or near to which they are located (Cobbina, Duwiejuah, Quansah, Obiri & Bakobie, 2015). As depicted in Figure 3.1, business activities come with social, environmental and economic benefits, harm and costs. The next sections look at the social, environmental and economic effects of mining activities in Ghana.
4.4.4.1. The Social environment
The impact of mining operations in Ghana both from large and small scale miners is diverse and quite devastating, touching on the livelihood and the very existence of people by affecting large tracts of land need for farming activities acquired by mining companies for large scale surface mining operations and thus depriving mining communities of their source of livelihood (Akabzaa & Darimani, 2001; Amponsah- Tawiah, 2014). Occasional cyanide contamination of water bodies by large scale surface mining operations and mercury contamination from small-scale and illegal mining activities are common. Malaria and upper respiratory tract infection have been cited as the two top causes of outpatient morbidity from 2000-2006 (Amponsah-Tawiah & Dartey-Baah, 2011). There is also a sharp increase in cases of sexually transmitted diseases in the mining areas. Commercial sex workers are mostly attracted to mining communities with the intention of earning higher for their services. Some inhabitants who fail to get other jobs in those mining areas also may end up becoming prostitutes. It is
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believed that the growing incidence of HIV cases in the Wassa Amanfi District, which is a mining area in the Western Region is one of the highest in the country (see Table 4.11), and is due to the increasing incidence of the sex trade in the area.
Table 4.11: National HIV prevalence rate compared with Wassa Amanfi District
Year National HIV prevalence rate
Wassa Amanfi District HIV prevalence rate
2008 1.7% 6.4%
2009 1.9% 5.3%
2010 2.0% 4.6%
(Ghana Aids Commission, 2016)
Social vices such as gambling, alcoholism and the use of illicit drugs (Ruddell, Jayasundara, Mayzer & Heitkamp, 2014) such as marijuana and cocaine as stimulants to enable hard work have also taken root particularly amongst illegal and small-scale miners in Ghana. Other social health impacts created by mining activities include hearing loss and silicosis. This is due to the continuous blasting and drilling activities with their resultant noise and dust, which have become a big concern in the mining regions. Large scale surface mining, unlike underground mining in the past, has destroyed vast proportions of farm lands from mining communities including demolition of Ghana’s major export earner, cocoa (Opoku-Ware, 2010). There is a worsening unemployment situation in those communities since the majority of the indigenes are farmers (Amponsah-Tawiah, 2014). With most of the mining activities being capital intensive, less people are employed in the sector, thereby compounding the problem of unemployment in the mining areas of Ghana (Aboagye-Amponsah, 2015; Essah & Andrews, 2016). The operations of mine in these areas have also created other social problems such as overpopulation, congestion, and pressure on basic social amenities. Thus the “gains” from the sector in the form of increased investment and foreign exchange earnings are mainly advantaging Ghana’s local elite and the foreign investors (Horvath, 1972), and are being
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achieved at some significant environmental, health and social cost to the people living in mining communities and the nation as a whole (Aboagye-Amponsah, 2015; Amponsah- Tawiah, 2011; Aubynn, 2003).
Community leaders in different parts of the country often argue in support of illegal mining despite its adverse impacts, arguing that the activities have long been the source of livelihood of rural Ghana. This was well before the arrival of today’s large foreign mining companies and surface mineral extraction continues to be a vital economic activity among local operators with deep ancestral ties to mining lands (Bansah, Yalley & Dumakor-Dupey, 2016; Macdonald, Lund, Blanchette & Mccullough, 2014). There are reports of a heavy involvement of traditional leaders and local politicians in illegal mining operations, the mind-sets of many operators toward alternative income-earning activities; the numerous and diverse range of employment opportunities provided by the sector; and the level of investment in operations (Banchirigah, 2008; Hilson et al., 2014). Some of the illegal miners are migrants, especially from China, and these migrant artisanal miners are competing for land with existing large-scale mines over land resulting in disputes between these two groups (Okoh, 2014). Again, many companies hold onto vast concessions granted to them as far back as the 1950s without undertaking any prospecting work on them. This has prevented new investors from having the opportunity to enter the Ghanaian market, just when it is improving (Okoh, 2014).
A Mineral Development Fund has been set up by the Government of Ghana taking 20% in royalty revenues (the remainder goes into a consolidated account). Half of this goes to support the government institutions and agencies which support mining at a national level, such as the Ghana Minerals Commission; the other half is distributed amongst district assemblies (60%), stool lands (20%) and traditional authorities (20%) who have authority over mining activities in their locations (Akabzaa, 2009). There are significant political challenges to the allocation
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of this revenue at local level, with receipts used for recurrent expenditure by district assemblies and on private projects by chiefs, rather than on remedial or developmental initiatives for the benefit of the masses (Bloch & Owusu, 2012). This has resulted in mistrust by communities surrounding mining activities, as there have been delays in the release of mining royalties to the mining communities by the Central Government, but the communities have directed their anger at miners (Oxford Business Group, 2014). As indicated earlier, the mining industry is largely owned by foreign multinationals and this has created the impression that foreign companies are in Ghana to exploit the country (Oxford Business Group, 2014).
4.4.4.2. Ecological environment
The International Monetary Fund, the International Development Agency and the Government of Ghana’s collaboration to reform the mining industry of Ghana have not received corresponding reforms in other sectors, such as the environment and health care sectors, to accommodate the potential impacts arising from the accelerated growth in the mining industry (Amponsah-Tawiah, 2015). This situation has resulted in a negative effect not only on mining communities but the economy at large. An attempt to quantify annual losses to the economy through environmental degradation by the Environmental Protection Council in 1988 put conservative estimates at GHȻ 41.7 billion, or 4% of total GDP. Even though the annual cost of mining activities is not clear, evidence of environmental pollution in river bodies clearly indicate dangers for the health of communities around mines. For instance, in Prestea, a mining city in Ghana, there were high levels of arsenic and antimony concentrations in the rivers (from 0.90 – 8.25 ppm and 0.09 – 0.75 ppm respectively), far exceeding the World Health Organisations recommended values of 0.01 and 0.005 ppm respectively (Serfor-Armah, Nyarko, Dampare, Adomako, 2006).
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The environmental and social impacts of illegal artisanal mining in sub-Saharan Africa are well documented (Hilson, 2017; Kitula, 2006; Olujimi et al., 2015; Wilson, Renne, Roncoli, Agyei- Baffour, & Tenkorang, 2015). In Ghana in particular, the industry has experienced unprecedented and chaotic growth for the past two decades, bringing about many problems that the authorities have struggled to address (Amankwah & Anim-Sackey, 2003; Hilson et al., 2014; Hilson, 2017). Thus, while the economic benefits from the industry appear enormous so are the problems that emanate from mining operations. The principal elements of the environment (i.e., land, water and air) have been severely affected by mining activities in Ghana. Mining firms in Ghana are claimed to release toxic chemicals such as arsenic, cyanide, cadmium, lead and mercury, and these affect the water, the soil and the food crops grown in mining communities (Amponsah-Tawiah, 2011; Cobbina et al., 2013). Figure 4.10 shows a water body in Ghana polluted by mining activities.
Figure 4.10: A water body in Ghana polluted by mining activities (Source: Citifmonline.com, 2016)
152 4.4.4.3. Economic contributions
Currently, statistics from the Ghana Revenue Authority indicate that the minerals and mining sector continues to be a leading source of fiscal revenue for the country as its contribution towards Ghana’s economic development keep rising (see Figure 4.11).
Figure 4.11: Commodities in Merchandise Exports (2015) (Source: Bank of Ghana, 2016)
Currently, Ghana’s mining sector’s corporate tax is 35% compared to the average corporate tax rate of 25%. The mining sector’s contribution in direct taxes to Ghana in 2015 was GHȻ 1.35 billion. Even though that figure represents an 8% increase on the GHȻ 1.24 billion recorded in 2014, the mining industry’s share in total direct taxes to Ghana’s economy reduced from 16.2% in 2014 to 14.8% in 2015 in terms of mineral royalties, pay as you earn (PAYE) and other taxes. The sector’s fiscal payments comprised GHȻ 463.12 million in corporate taxes, GHȻ 485.6 million in royalties, GHȻ 404.74 million in PAYE and GHȻ 0.87 million in other taxes. In 2013, 86.6% of export revenues from the mining sector came from gold, making the gold the top export and source of foreign currency: gold generated $4.2bn in 2013, compared with $3.2bn from oil and $1.3bn from cocoa (Oxford Business Group, 2017).
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According to the Bank of Ghana, the mining sector was the leading source of foreign exchange in 2015, contributing in excess of 31% of total merchandise exports. The inflows from the mining sector made a large contribution to the relative stability of the local currency in 2015, with producing member companies of the Chamber of Mines returning 85% of their realised mineral revenue into the country, US$2.6 billion through the commercial banks and the US$0.50 billion via the Central Bank. The companies spent 28% of their mineral revenue on local purchases of consumables, which represents a nominal value of US$865 million. Similarly, US$166 million was used in importing consumables to support the production process. Expenditure on local purchases increased from 18% of mineral revenue in 2011 to 28% in 2015 while expenditure on imported consumables declined to 5% from 15% over the same period. The Ghana Living Standards Survey conducted between 2005 and 2006 indicated that mining’s share of total employment in Ghana was about 0.7% (Ghana Statistical Service, 2008b). According to the 2010 census, the mining and quarrying sectors altogether employ 1.1% of the workforce (Ghana Statistical Service, 2013). As well as paying taxes and providing employment opportunities, mining companies also make direct contributions to the communities that host their operations.
In 2002, the Ghana Mineral Commission mandated all mining companies to adopt the concept of corporate social responsibility to assist their host communities (Temeng & Abew, 2009). Consequently, all producing mining companies in Ghana have set up departments and units to deal with corporate social responsibility, which tie mining production and revenue to funds for corporate social responsibility (Bloch & Owusu, 2012). For instance, Gold Fields Ghana Limited’s Sustainable Community Empowerment and Economic Development (SEED) programme, Golden Star Development Foundation (GSDF), and Newmont’s Ahafo and Akyem Foundations have been set up for community development by some of the leading mining firms in Ghana. These social investments are diverse and support a range of
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developmental areas such as education, health, alternative livelihood assistance and other infrastructural needs of host communities (Edwards et al, 2014; Measham & Fleming, 2013). The expenditures are intended to complement the government’s efforts to develop the mining communities (Essah & Andrews, 2016). However, several studies have shown otherwise (Edwards, Sloan, Weng, Dirks, Sayer & Laurance, 2014; Measham & Fleming, 2013). For instance, Awudi (2002) claims:
Despite these positive indicators, the role of the mining industry in the economic development of Ghana is suspect. Despite the over US$2 billion Foreign Direct Investment (FDI) in mineral exploration and mine development during the last decade indicating over 56% of total FDI flows to the country (with the attendant increase in mineral exports) the sector is yet to make any meaningful impact on the country’s overall economy (p. 1).
Having looked at Ghana’s mining sector and its contribution to socio-economic development, as well as its challenges, the next section presents an overview of Gold Fields and its Damang Mine and justifies why Gold Fields was chosen for this study.
4.5. Chapter summary
This chapter has described and analysed the context for this study and it shows the impact of global mining sector and, in particular, Ghana’s mining industry and how it has shaped the country’s historical, economic, social and ecological environment. For the 1,000 years up to the end of British colonisation, Ghana has been linked to the West African and intercontinental gold trade (hence the colonial name for the country: The Gold Coast). After a fall in production immediately after independence in 1957, Ghana has come to rely on the mining sector economically. However, the sector is largely foreign-owned by a few large companies from
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Canada, Australia, South Africa and the US. Aside from these multinationals, there are local artisans and small-scale miners who are employed by the mining sector.
In the mining sector globally, there has been sporadic growth of interest in sustainability which is mainly due to stakeholder pressure. Hence mining companies in collaboration with stakeholders have developed policies and standards to promote sustainable development in the sector. Similarly, even though there are claims of an economic contribution from Ghana’s mining sector, these economic gains have been at the expense of the environment and social wellbeing. Mining firms in Ghana engage in sustainability reporting on their social and environmental activities in the name of sustainability. However, stakeholders, especially communities near the mines and regulators are claimed to be unsatisfied with these sustainability initiatives. Furthermore, in the last two decades, several established regulatory bodies, including government ministries and agencies, monitor the activities of the mining sector. Thus, local regulatory bodies such as the Ministry of Minerals, Lands and Natural Reserves and international bodies such as GRI, the ICMM, and the UNDSD (Fonseca et al., 2014; Onn & Woodley, 2014) monitor and encourage the mining firms to report on their activities. Even though these institutions exist, there is weak policy and legal/regulatory frameworks resulting in several social, economic and ecological challenges to the country in spite of the economic benefits derived from the mining sector (Aryee, 2001).
This chapter further presented the profile of Gold Fields Limited as the case study. It was learnt that Gold Fields is a leading South African mining multinational company with operations in Australia, South Africa, Ghana and Peru. Gold Fields is reported to have a good reputation for sustainability, as it is part of the Dow Jones Sustainability Index and has high ratings in sustainability reporting by the GRI.
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In Ghana, Gold Fields Limited is the second largest mining company, with two subsidiaries, namely, Takwa and Damang. The Damang Mine which was chosen for this study has ten communities in which Gold Fields carry out various sustainable development projects through the Gold Fields Foundation. Given that there are several stakeholders in the mining sector, with some of them periodically requiring accountability, it seems prudent to investigate the sustainable development initiatives and reporting practices of these mining companies. This leads to the next chapter which discusses sustainable development practices and the perceived role of accounting in the case mining company.
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