Ghana Officials Question China’s Ambitions in Bauxite Mining Plan

Ghana's President Nana Akufo-Addo (C) speaks to Chinese leader Xi Jinping (not pictured) during their meeting at the Great Hall of the People in Beijing on Sept. 1, 2018. Nicolas Asfouri/AFP/Getty Images

Ghana is a country rich in natural resources, including crude oil, gold, diamonds, and minerals such as manganese and bauxite, and China—one of the West African country’s biggest investors—has set its sights on those valuable products.

The investments are part of Beijing’s ambitious development project known as “One Belt, One Road” (OBOR, also known as Belt and Road), announced in 2013 as a plan to build up trade routes linking China, Southeast Asia, Africa, Europe, and Latin America.

While Beijing has claimed that the initiative is a bid to enhance regional connectivity, many observers say that what China really intends to achieve with OBOR is a grab for dominance in global affairs through a Beijing-centered trading network.

In July, Ghana’s Parliament approved a Master Project Support Agreement (MPSA) between Ghana and China’s state-run Sinohydro Corporation, according to Ghana Web. Under the agreement, Sinohydro will provide $2 billion of infrastructure projects, including roads, bridges, hospitals, and housing, in exchange for rights to mine Ghana’s refined bauxite deposits in the Atewa and Nyinahin Forest Reserves—another mineral-rich forest in the Ashanti region of Ghana.

The Atewa Forest, about 26,000 hectares (about 64,250 acres) in size, is considered a crown jewel of Ghana’s biodiversity, as the forest holds over 100 species of plants, 230 species of birds, and at least 50 species of mammals. The forest, which is the source of three major rivers in the region, also provides drinking water to more than a million residents in Accra.

Bauxite is a clay rock that can be refined to produce aluminum. Bauxite isn’t economical to mine in the United States, because it uses so much electricity, which is relatively costly in the United States. Thus, considerable alumina production has moved abroad.

Kojo Yankah, the founder of the African University College of Communications—located in Ghana’s capital of Accra—and a former minister under former Ghanaian President Jerry John Rawlings, recently spoke of his concern that the Atewa Forest could soon be lost to China.

“It is not just the land. There will be a time when I’m sure there will be police guards in the area, no Ghanaian should enter there because it doesn’t belong to us. It is happening in other African countries, that’s where my concern is,” Yankah said in a keynote speech at an annual public relations event held in Accra, according to a Sept. 19 report by news site Ghana Web.

“I have no problem with a government that wants money. My problem is with what you’re exchanging the money with,” Yankah said, expressing worries that the Atewa Forest could be exploited.

The Chinese regime explicitly states that a major goal for OBOR is investment and control of foreign mineral deposits, which will power the growth of different Chinese industries. For example, China has controlled cobalt mines in Congo that are being used to make electric car batteries. New energy vehicles (NEVs) are among the 10 tech sectors that Beijing has targeted for development, as part of the regime’s plans to turn China into a high-tech manufacturing hub.

According to statistics provided by China’s Ministry of Natural Resources, in the first half of 2017, Chinese companies signed 17 acquisition deals of foreign mines with a total value of over $10 billion. Many of China’s OBOR projects have come under scrutiny for saddling developing countries with heavy debt.

China’s most recent infrastructure and mining deal in Ghana has generated strong opposition among Ghanaian officials, academics, and local residents.

A miner rests in a field in Kibi on the Eastern Region of Ghana on April 10, 2017. Cristina Aldehuela/AFP/Getty Images

Potential environmental damage remains the primary concern. A Sept. 19 editorial published by Ghana Web called on current Ghana president Nana Addo Dankwa Akufo-Addo to review the history of Sinohydro, the company’s mining plan, and how it plans to manage mine tailings, the ore waste of mines. If not, the article warned, “Sinohydro is going to leave our land naked after they are done shipping our bauxite.”

At the Atwima Mponua District, where the Nyinahin Forest is located, local leaders and residents complained that even though mining in the area would begin soon, they hadn’t yet signed a memorandum of understanding on their socio-economic demands to ensure that their communities would benefit from the mining, according to a Aug. 29 article on environment news site ENA Ghana.

Some farmers also complained that cocoa trees had been cut down without prior notice, according to ENA Ghana. They demanded compensation because the trees were their only source of livelihood.

Debt Stress

Some Ghanaian officials have pointed out that the agreement with China’s Sinohydro is, in fact, a loan in disguise.

Cassiel Ato Forson, a spokesperson for National Democratic Congress (NDC), currently the minority political party in Ghana’s parliament, presented several arguments to show that the MPSA is a loan, according to a Sept. 11 article by Ghana news website Pulse. Forson noted that among the terms of the agreement is that the Ghana government is mandated to open an escrow account, and has to make sure the account “has enough balance to settle debt service and repayment when due.”

A group of gold panners work in Kibi, a town in southern Ghana, on April 10, 2017. Cristina Aldehuela/AFP/Getty Images

On Aug. 24, Reuters reported that the NDC had requested that the International Monetary Fund (IMF) review the MPSA to see if the deal will add to Ghana’s debt burden.

Ghana is already sitting on a mountain of debt. Ghana Web, citing statistics from Bank of Ghana, reported that the country’s debt stood at about 154.2 billion cedis (about $32.3 billion) as of May 2018, which amounted to 63.8 percent of Ghana’s GDP (gross domestic product).  

IMF has recently warned of countries that are at risk of debt distress, with Ghana among a list of African nations where China holds the majority of its external debt, according to Reuters.

What could make the debt situation in Ghana direr is the fact that the $2 billion agreement is part of an overall $19 billion loan facility, according to multiple Ghana media reports. Part of the loan will be used to build a 4,000 km (about 2,485 mile) railway connecting several Ghanaian towns such as Sunyani, Techiman, and Kumasi.