Ghana's government has agreed to purchase 30% of large-scale mining companies' gold output starting July 1. This move aims to increase the nation's foreign currency reserves and develop local gold refining capabilities.
This arrangement expands upon a 2022 program where miners supplied 20% of their annual output to the central bank. The government revamped the program in February, targeting up to 157 metric tons by 2028. This quantity represents 15 months of import cover, a crucial measure of economic stability.
Ghana is Africa's largest gold producer. Central banks globally are accumulating gold as a reserve asset due to its high and stable value. This strategy strengthens Ghana's economic resilience against external shocks. Increased gold reserves can be sold internationally to generate much-needed dollar income.
The agreement mandates large miners to sell their gold, in dore form, to the state entity Gold Board, known as GoldBod. GoldBod already purchases all artisanal gold miners' output. Purchases will have a 0.55% discount off the central bank's reference rate. Payments will be made in Ghanaian cedis.
This initiative also aims to help Ghana secure London Bullion Market Association (LBMA) accreditation for at least one domestic refinery by 2030. Gold from this scheme will first undergo local refining. It will then be sent to an LBMA-accredited refinery for melting and stamping before joining the central bank's reserves. This process ensures the gold meets international standards for quality and purity.
The government's increased gold purchases reflect a strategic effort to fortify Ghana's economic standing. It provides a buffer against currency fluctuations and global economic instability. This program will boost the Bank of Ghana's gold holdings, which rose to 19.2 metric tons in February. This data comes from the Bank of Ghana itself.
The agreement with major miners like Newmont, Gold Fields, and China's Zijin marks a significant step. It deepens state involvement in the gold sector. This will have implications for the profitability of mining operations. It will also impact market dynamics for gold sales.