Delicate Balance: The Impact of Gold Mining in Ghana

A Stanford GSB student reports on a study trip to Ahafo, Ghana, where mining has shifted the village's social, economic, and infrastructure systems.

February 01, 2007

| by Sarah Adler, MBA '09

Newmont Mining poured its first gold in Ahafo, a small village about 180 kilometers north of Accra, in July 2006. With reserves of 20 million ounces, the mine promises large economic gains not just for one of the leading gold producers of the world, but also for the economy of Ghana.

The gold mining behemoth — headquartered in Denver, Colo. — gives the government a sizable cut of the revenues through taxes and royalties. Yet the business of mining is an invasive one, displacing citizens from their homes and disrupting the landscape on which locals depend for their livelihood.

As part of the Ghana study trip, we came to Newmont Mining to understand the gold mining business, as well as its effects on the surrounding communities and the economy of Ghana overall. We spent over half a day at the mine, touring the pits and attending a presentation about the business fundamentals of operating the mine. Yet perhaps the most memorable part of the day was hearing the head of the firm’s social responsibility group talk at length about Newmont’s efforts to establish effective relationships with the community.

Newmont has invested considerable resources in helping the local community in which it operates. When Newmont Mining resettled the citizens who were living on the land the mine now occupies, it ensured these people enjoyed houses that were, on average, larger than those they previously owned and had more sophisticated sanitation. In addition, the company pledged to reserve a set amount of jobs for the local citizens and to provide programs to educate local citizens in other income-generating jobs beyond farming.

The leaders of the nearby town of Keynasi #1, with whom we met later in the day, told a different story. Newmont had indeed built homes bigger and better than before, but they were far from town. Modes of transport were hard to come by, and the road was not well maintained — dust clouds rising from unpaved road made travel difficult.

While the Ahafo mine was meant to increase jobs for the local community, the leaders believed that the number of jobs was far fewer than Newmont had promised. While some townspeople had managed to secure well-paying spots at the mine, many jobs were going instead to people who feigned local residence. Newmont was helping to teach alternative income-generating activities, it said, but these methods were insufficient to offset the town’s economic losses With conflicting stories, assessing the economic impact of Newmont’s activities is challenging.

The introduction of the mine disrupted the traditional social structure. The tribal leaders and elders, who had once guided the town and were trusted by the community to help find jobs and solve problems, do not have the same authority they once did. The mine’s leaders now hold that power. Perhaps that is why, when we visited the tribal leaders late in December on a warm afternoon, the passion in their voices was not just frustration due to the lack of jobs for their people, but also an acute understanding that they were losing their own relevancy.

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