The government’s contract mining policy could create thousands of jobs, strengthen Ghanaian-owned businesses and keep more mining revenue in the domestic economy, but its success will depend on access to finance, technical capacity and fair treatment for workers.
Under the Minerals and Mining (Local Content and Local Participation) Regulations, 2020 (L.I. 2431), indigenous Ghanaian companies are expected to undertake contract mining for surface operations. Underground contract mining must be carried out through partnerships in which Ghanaian-owned companies hold at least 50 percent interest.
Contract mining involves a mineral-rights holder appointing an independent company to perform activities including drilling, blasting, excavation, haulage, equipment maintenance, dewatering and rehabilitation.
The policy could provide employment for skilled and unskilled Ghanaians, with operators needed for dump trucks, excavators, drill rigs, service trucks and other machinery. Although some roles do not require advanced academic qualifications, workers would still need appropriate training, licences and practical skills.
The Ghana Chamber of Mines says indigenous people account for nearly 42 percent of employees in mining companies. Moving more operations to local contractors could therefore expand employment and provide sustainable work for the country’s large population of unemployed young people.
Local contractors could also retain more mining expenditure in Ghana. They would pay workers from their operating revenue, buy spare parts available locally and use Ghanaian transport companies to move employees and materials. Replacing foreign service providers could reduce foreign-exchange outflows and ease pressure on the cedi, although the benefit would depend on contractors’ reliance on imported machinery, fuel, spare parts and other inputs.
Tax receipts could rise as well. The Minerals Commission lists sixteen large-scale mining companies in Ghana. If indigenous firms take over work currently carried out by foreign contractors, government could collect corporate income tax, PAYE income tax, withholding tax on contract payments and other applicable taxes, helping finance development projects.
The policy could encourage entrepreneurs to establish businesses specialising in haulage, drilling, blasting, equipment maintenance and other mining services. Existing indigenous companies could use the opportunity to expand, improve their capacity and become more competitive.
Financing and local supplies
Capital remains a major obstacle. Surface mining requires costly fleets of dump trucks, excavators, bulldozers and drill rigs. Contractors taking responsibility for load-and-haul operations must be able to move ore and waste every day, but local firms may struggle to secure the required funding.
Financial institutions and contractors should develop suitable financing arrangements following cost-benefit studies and assessments of project viability by qualified engineers and financial experts. The policy should also support public-private partnerships involving Ghanaian businesses in the production and supply of mining goods and services.
The Ghana Chamber of Mines’ 2024 report records about US$240.7 million in imported consumables, including drill rods, drill bits, drill pipes, blasting materials, tyres and other mobile-equipment consumables. Local manufacturing and supply could keep more of that spending in Ghana and reduce dependence on imports.
Protecting workers
Transferring operations from mining companies to contractors could affect wages, job security, allowances and other conditions of service. Differences in salaries, medical cover and benefits may cause dissatisfaction, labour disputes, lower morale and the loss of experienced employees.
The Ministry of Lands and Natural Resources and the Minerals Commission have recognised the issue, but enforcement of fair standards will be essential. Contract workers should receive transparent pay reflecting their skills, experience and responsibilities, including fair basic salaries, overtime, night-shift allowances and adequate healthcare.
The policy’s success should ultimately be judged not by the number of contracts awarded to Ghanaian companies, but by whether it creates competitive businesses, decent jobs, stronger local industries and wider economic gains.
By Agyarko Ebenezer, Principal Mining Consultant and Head of Technical Communications, West Africa Cooperatives Networks (WACoN)
