Fitch Solutions, the research arm of Fitch Ratings, has projected a four percentage point growth in gold production for this year.
The projected growth according to Fitch Solutions, is on the back of new gold mining projects to be carried out by mining firms as well as the integration of artisanal miners into the country’s formal gold mining sector.
Growth in the mining sector coupled with increment in gold prices due to the Russia-Ukraine war, Fitch Solutions asserts, is expected to widen the country’s trade surplus for 2022 with exports of the gold and oil to increase by a robust 26.9 per cent this year over the 1.8 per cent recorded in 2021.
Fitch Solutions however, said it expected Ghana’s oil output to decline by 1.3 per cent this year.
“Elevated global commodity prices will cause Ghana’s trade surplus to widen in 2022. Supply disruptions and risk-off sentiment following Russia’s invasion of Ukraine have increased prices of crude oil and gold – Ghana’s two leading export commodities (together accounting for roughly a third of total exports) – and in turn Ghana’s export earnings,” it said in a report issued on Thursday.
“From a volume perspective, however, a projected decline of 1.3 per cent in oil output in 2022 indicates that Ghana will not be able to reap the full benefits of elevated energy prices. In contrast, we expect gold production to expand by a healthy 4.0 per cent, supported by the start of new gold mining projects and the integration of artisanal miners into Ghana’s formal gold mining sector,” it said..
The report said “taking these dynamics into account, we project merchandise exports to increase by a robust 26.9 per cent over 2022, up from 1.8 per cent in 2021.”
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Ghana has lost its position as the continent’s biggest bullion (gold) producer to South Africa.
Ghana lost the prestigious position (previously held by South Africa) when its gold production declined by 29.9 per cent to slightly over 2.8m ounces last year – 2021 – from 4.02m ounces in 2020
Prior to 2020, gold production by Ghana dropped from 4.57m ounces in 2019. The recorded gold production of 2.8m ounces for 2021 is the lowest since 2008.
The decline in the production of the precious metal was despite a 16 per cent anticipated rebound in production for 2021 by the Ghana Chamber of Mines.
Mainly accounting for the decline in production, the Chamber was due to low investments in the sector coupled with taxes and levies imposed on mining firms.
According to the chamber, taxes and levies imposed on mining firms are making exploration investments into the country’s mining sector unattractive.
The Chamber said that mining exploration companies should be allowed by the State to use 100 percent of their exploration investment in mineral exploration – particularly gold – rather than being made to pay taxes and other levies before even breaking the ground to find the mineral.