Three Essays on Small-Scale Gold Mining Operations in Ghana: An Integrated Approach to Benefit-Cost Analysis

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The thesis is a monographic piece of three essays or papers on small-scale gold mining in Ghana synthesized into one document. The essays therefore, represent different but related essays as indicated in the title of the thesis. The first essay highlights on contemporary issues on small-scale gold mining operations in Ghana. The second essay focuses on comparative study in the Bibiani, Bolgatanga, Dunkwa and Tarkwa Mining districts of the Minerals Commission of Ghana. The third essay which is the most dominant of the study is on an integrated approach to benefit-cost analysis on smallscale gold mining operations in the Bibiani, Bolgatanga, Dunkwa and Tarkwa Mining districts of the Minerals Commission of Ghana. The objective of the first essay is to discuss current issues, specifically, the challenges and potentials of small-scale gold mining operations in Ghana. Output, revenue and employment effects from small-scale mining; environmental and occupational health issues; operational constraints including financial issues, skills and training, occupational safety, constraints on women’s participation; child labour abuse issues, tensions and conflicts of interest between large scale gold mining companies; and the long process involved in obtaining permits to operate as licensed small-scale miners are the main highlights of the essay. The research methodology used was a survey design. The essay concludes that small-scale mining in Ghana is beset with environmental, occupational health and operational constraints or problems and that addressing them would help promote (a successful existence of) small-scale gold mining as a socially and economically viable activity in the country. The second essay aims to provide a comparative study on small-scale gold mining industry in the Bibiani, Bolgatanga, Dunkwa and Tarkwa Districts of the Minerals Commission of Ghana. Variations in production, employment, number of licensed operators/concessions were the main focus of the essay. The study used both quantitative and qualitative methods. iv The statistical tool employed was a two-way analysis of variance (ANOVA). The study tested for statistical interdependence of the means of equality between the mining districts (distance, that is, row effect) and the means of equality across time (years from 2005 – 2008, that is, column effect). The essay concludes that even though the small-scale mining sub-sector in Ghana is plagued with a number of challenges, production and employment levels as well as the number of licensed operators or concessions have increased considerably over the years. Managerial structures, choice of technology and profitability are among the factors or issues that explain the magnitude of the differences in the mining districts. Small-scale mining should be recognised as a significant contributor of rural livelihoods that has the potential to alleviate poverty and be a tool for sustainable development. The essay suggests that adequate technical, financial, economic and organizational assistance or support should be provided to enhance small-scale mining operations in Ghana. The third essay undertakes to measure the expected net benefits, net future values and benefit-cost ratios resulting from small-scale gold mining operations particularly, in the Bibiani, Bolgatanga, Dunkwa and Tarkwa mining districts of the Minerals Commission of Ghana. The essay discusses the conceptual and methodological framework, specification of benefit-cost operational models, data collection and analysis methods and empirical results and analysis. A benefit-cost analysis was carried out in the individual four mining districts before a combined total benefit-cost analysis was performed for all the four mining districts. It must be emphasized that in this study, benefit-cost analysis (BCA) and cost-benefit analysis (CBA) imply the same thing. Hence, they are used interchangeably. The results showed that, the Bolgatanga Mining District that recorded an average net benefit of GH¢39,966,554.83 and therefore, promises to be worthwhile and worth continuing with the existing mining activities in that district. The outcomes of all the other mining districts: Bibiani, Dunkwa, Tarkwa with the combined total however, recorded negative average net benefits of (GH¢1,572,088.66), (GH¢ 7,588,627.13), (GH¢121,483,027.35) v and (GH¢90,252,809.70) respectively. This suggests that small-scale mining activities in these mining districts (Bibiani, Dunkwa and Tarkwa), are not worthwhile or viable and therefore, not worth continuing with the existing mining activities. In general, smallscale mining activities in all the four mining districts (Bibiani, Bolgatanga, Dunkwa and Tarkwa) combined are also not economically viable. The analysis of variance indicates that enterprise profitability of operation across the activity sectors matters much in profitability of operation, though, location or mining district/area does not matter much so far as profitability of operation is concerned. The Chi square (χ2) test also indicates that both the benefit and cost variables between the Bibiani, Bolgatanga, Dunkwa and Tarkwa mining districts/areas and across sector activity, namely: physical environmental, social and aggregate economic factors are not statistically related or associated with each other. The sensitivity analysis performed shows that real NFVs tended to be responsive to the real rate scenarios. The essay concludes that small-scale mining in Ghana is not economically viable and that if the small-scale mining sub-sector is to achieve its full potential, then more attention should be paid to the high negative environmental, social and aggregate economic impact or costs. The essay recommends that regulations and guidelines that aim at promoting efficiency in mining operations; minimizing the negative environmental, social and aggregate economic costs or impact; promoting high health and safety standards; and identifying obligations for all stakeholders should be developed to make small-scale mining operations in Ghana economically viable and sustainable.
Thesis submitted to the Department of Economics, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the degree of DOCTOR OF PHILOSOPHY (PhD)