Ghana's government will purchase 30% of the gold output from large-scale mining companies starting July 1. This action aims to boost the nation's foreign currency reserves and develop local gold refining capabilities. The government reached this agreement with mining firms, expanding on an earlier gold purchase program.
This initiative is critical for Ghana's economic stability, as increased foreign currency reserves protect the country from external financial shocks. The arrangement also targets local refining, aiming for at least one domestic refinery to gain London Bullion Market Association (LBMA) accreditation by 2030. LBMA accreditation signifies global recognition for gold quality and responsible sourcing practices.
This expanded gold purchase program builds on Ghana's strategy to enhance its gold reserves, which began in 2022. The initial agreement with miners, negotiated through the Ghana Chamber of Mines, stipulated that 20% of their annual gold output would be sold to the central bank. Bank of Ghana data show holdings rose to 19.2 metric tons by February, highlighting the program's initial success. The government revamped the program in February, setting an ambitious target of acquiring 157 tons by 2028, equivalent to 15 months of import cover. This represents a significant increase in the nation's strategic gold holdings, providing a substantial buffer against economic uncertainties.
Under the new agreement, large miners will sell 30% of their gold output to GoldBod, a state-owned entity. The purchases will be made in dore form, which is partially refined gold. The price will be discounted at 0.55% of the central bank's reference rate, and all payments will be settled in Ghana cedis. This local currency settlement helps to manage foreign exchange demand within the domestic economy. Gold from this scheme will first undergo local refining before being sent to an LBMA-accredited refinery for final melting and stamping, prior to being added to the central bank's reserves. GoldBod already has a mandate to purchase the entire output from Ghana's artisanal gold miners, making this an extension of its existing role in the gold supply chain.
This move has significant implications for Ghana's economy and its ambition to become a major gold refining hub in West Africa. Increased gold reserves enhance investor confidence and provide a safer asset during global economic volatility. The focus on local refining will create jobs and add value to Ghana's primary commodity exports, moving beyond simply exporting raw materials. Decision-makers will closely monitor the impact on foreign exchange rates and the progress towards LBMA accreditation. Success in boosting refining capacity could attract further investment into Ghana's gold sector and strengthen its position in global commodities markets.