Ghana’s Illegal Gold Rush Sparks Political Turmoil and Electoral Risks

Gold is an undeniable presence in Tarkwa. It’s in the surrounding forest, beneath your feet as you navigate through Ghana’s largest mining town. It’s the backbone of the local economy. Gaping holes in the ground indicate efforts to illegally extract this cherished metal, while a contaminated river bordering the town illustrates the repercussions of the surge in semi-industrial mining activities.

The environmental degradation has sparked significant protests in Accra, urging a complete ban on small-scale mining in areas such as Tarkwa. In response, concerned local politicians, facing national elections on December 7, have attempted to reassure licensed mines that they will be protected from the government’s crackdown on illicit activities, commonly referred to as “galamsey”.

“In Accra, they aim to impose a ban, yet I am here to affirm my support for miners,” stated George Mireku Duker, the deputy mining minister and local legislator, during visits to four underground operations in October. Duker admits that unlawful mining is a significant concern, but he also understands that a voter backlash against the New Patriotic Party (NPP), which he is a part of, could jeopardize his position on Dec. 7, having won his seat by merely 101 votes in 2020.

“The small-scale mining sector provides jobs for over a million Ghanaians, whereas large-scale operations employ fewer than 10,000,” Duker remarked to Bloomberg News. “Do you intend to deprive them of their means of survival?”

The mines that Duker visited have roots tracing back to the colonial era and are currently managed either privately or by local communities to counter the foreign dominance in large-scale mining within this indebted West African nation. These artisanal and small-scale (ASM) mines—defined as operations occupying less than 25 acres—were responsible for producing more than a quarter of the four million ounces of gold that Ghana mined in 2023, valued at approximately $10.6 billion at current prices, a rise from 10% in 2012.

Bolstered by heavy machinery and fueled by lenient regulation, the ASM sector predominantly operates informally: it is estimated that as much as 70% of these mines, which have proliferated in regions like Tarkwa, are unregulated.

The surge in illicit gold mining is driven by skyrocketing prices—up by more than a third this year to an all-time high of $2,787 per ounce in October—and eager buyers in Dubai and beyond. The landscape in Tarkwa reflects this reality: makeshift tents perched atop slopes, with tattered clothing draped over wooden panels, conceal mining activities at the town’s core, while young men linger outside Chinese machinery shops, offering their services as operators in return for a portion of what they locate in the rivers.

The distinction between legal and illegal operators is frequently unclear. “Many individuals do possess licenses,” states Ishmael Quaicoe, head of the environmental and safety engineering department at Tarkwa’s University of Mines and Technology, “but their operations often do not comply with legal requirements.”

Recent protests in September and October have highlighted the repercussions of galamsey mining. However, when the Trades Union Congress joined the movement, it intensified the demands, calling for a complete ban on all small-scale gold mining to stop practices attributed to river pollution—one facility from Ghana Water Company indicated in August that 60% of the raw water it treated was contaminated by illegal mining, impacting cocoa production and decimating forests.

Both major political factions—the ruling NPP and the opposition National Democratic Congress—have exchanged blame over the mining controversy. As the elections draw near, President Nana Akufo-Addo responded to the calls for a ban by threatening military action against mining towns to combat galamsey operations.

Though he has yet to act on this promise, the announcement has resurrected memories of a strict crackdown on illegal mining in 2017. The ban on ASM mining lasted roughly two years but backfired for the government, with allies citing it as a contributing factor to the loss of its parliamentary majority in the 2020 elections.

According to a 2020 government estimate, at least 4.5 million people, including workers and their dependents, depend on gold for their livelihood. Hence, the timing of these protests presents a dilemma for the NPP, which polls suggest may face its worst electoral results ever on December 7, based on data from the Accra-based Global Analytics.

Amid its mineral wealth, nearly 20% of the population in the Tarkwa-Nsuaem municipality—Duker’s constituency—live in dire poverty, struggling with various deprivations from insufficient clean water to inadequate shelter, as per the Ghana Statistical Service. The scarcity of educational opportunities often leads young individuals to pursue low-skilled and perilous jobs in the ASM sector.

“They are perishing from poverty, hence they disregard warnings about the dangers of mercury or cyanide,” states Elorm Ama Governor-Ababio, who was arrested while participating in a Democracy Hub protest in Accra. “They endure immense trauma so when faced with a life-threatening situation, they perceive it as a glimmer of hope,” adds Governor-Ababio, who denies any wrongdoing.

Making the good delivery list

Schoolchildren in Ghana are educated that their nation—historically known as the Gold Coast during British colonialism—boasts such an abundance of the precious metal that the sand sparkled as the first Europeans arrived in the 15th century.

In those initial days, Akan traders exchanged their gold dust for European goods like alcohol, copper, and even textiles. Centuries later, Ghana continues to be Africa’s leading gold producer, with significant players such as the UK-based Anglogold Ashanti, South Africa’s Gold Fields, American firm Newmont Corp, and China’s Chifeng Jilong Gold Mining Co actively involved.

At the opposite end are ASM operators. Adwoa Pokuaa Boaduo, a mining engineer who authored a doctoral thesis on the possibilities for reforming artisanal and small-scale mining in Ghana, points out that insufficient compliance checks enable licensed gold purchasers to acquire gold from illegal mines, thereby legitimizing its origin.

Rosemary Addico, who heads the responsible gold program at Solidaridad’s West Africa—a non-governmental organization advocating for adherence to global best practices among miners—argues that the responsibility lies with buyers to examine the origins of the gold: “Once international buyers demand certain standards, traders will become more cautious about their gold’s source and mining methods.”

To be accepted by the most discerning buyers globally, including central banks, institutional investors, and luxury brands, gold must come from refiners on the London Bullion Market Association’s Good Delivery List. This influential trade body doesn’t certify mines but holds the refiners it licenses accountable for the gold in their supply chains, resulting in many being reluctant to accept any gold directly from small-scale producers that could jeopardize their certification.

Nonetheless, numerous other buyers of Ghanaian gold with lenient oversight remain. Nana Akwuasi Awuah, the head of the state-owned gold marketing company—and several market participants—assert that gold from smaller illegal mines often finds its way to Dubai refineries. However, none of these refineries are registered on the LBMA’s Good Delivery List, although the emirate does enforce regulations requiring refiners to verify that gold is sourced responsibly.

Upon import, the gold can be re-refined and marketed as “recycled” bullion to jewelers in India and other eastern markets, even reaching LBMA-accredited refiners without acknowledging its original source. The LBMA mandates refiners to conduct checks ensuring responsible sourcing of gold, yet tracking the provenance of recycled gold can be incredibly challenging, a reality illustrated by a 2022 study shared on the trade association’s website.

Illegal mining imposes an economic burden on Ghana, which is grappling with over $30 billion in external debt and secured a $3 billion bailout from the International Monetary Fund last year.

If the mining sector were formalized, Ghana could potentially more than double its gold revenue this year, according to Martin Ayisi, the chief executive officer of Ghana’s Minerals Commission, which oversees both large and small mining operations. Ayisi estimates that at least 75% of the country’s artisanal and small-scale gold production isn’t reflected in export statistics. This lack of reporting stems from gold being either smuggled out overland to neighboring countries like Ivory Coast, Togo, and Burkina Faso—which enforce lower withholding taxes on unprocessed gold—or instead recorded as transhipped from one of these nations, despite originally being mined in Ghana.

“There are numerous tactics for smuggling gold out,” Ayisi explains. “One way to halt this is by further reducing the tax,” which was decreased to 1.5% from 3% in 2022, resulting in an immediate increase in Ghana’s production.

The Dubai connection

In 2023, the United Arab Emirates reported imports of $3.2 billion worth of gold (52.9 metric tons net weight) from Ghana. In the same year, Ghana reported just $1.7 billion in gold exports to the UAE (27.8 metric tons net weight), according to the United Nations’ Comtrade Database. This discrepancy results in a shortfall of approximately $1.5 billion.

Dubai—a hub among the seven emirates of the UAE—has no gold mines of its own yet has established itself as a significant trading intermediary for the metal. The LBMA designates the UAE as a high-risk area, subjecting it to heightened scrutiny for any gold sourced from there.

However, Safeya AlSafi, the UAE’s acting undersecretary for commercial control and governance at the Ministry of Economy, informed Bloomberg News that this shortfall may stem from misreported details from the exporting country, adding, “I can’t definitively say there’s any smuggling. We maintain a very rigorous system.”

At the Minerals Commission, Ayisi acknowledged the difficulty in tracking what exits Ghana.

Ghana was among the pioneering nations in Africa to legalize artisanal and small-scale mining, a sector that globally accounts for about one-fifth of the world’s gold supply, according to a report from the World Gold Council. Presently, officials broadly agree that advanced formalization is crucial to counteract smuggling and mitigate environmental damage.