President of the Ghana Chamber of Mines, Michael Edem Akafia, has explained why mining companies are not reaping as much as expected despite record gold prices on the international market.
Speaking on Joy News’ PM Express Business Edition, he said the current boom hides the deeper struggles of firms.
“When people look just at the gold price, it doesn’t tell the whole story,” he stressed.
He explained that the surge in gold prices often triggers an automatic increase in the cost of inputs.
“Your input prices are almost adjusted accordingly, because most people will factor that into their pricing,” he noted.
Beyond this, Mr Akafia pointed out that higher prices force firms into more complex operations.
“If you have a concession, when gold price goes up, that may require you to mine some of your marginal areas. What that means, though, is that you are mining it at that high cost. So it means your margin is not as high as everybody expects it to be.”
He described the consequence as a paradox.
While the world sees glitter in soaring prices, firms grapple with high costs and shrinking margins.
This, he added, explains why production growth has remained flat for large-scale mining despite small-scale output almost doubling.
“Production stagnating at 2.9 million is telling you a story,” he said.
Mr Akafia linked the situation to weak exploration pipelines, which threaten the sector’s long-term prospects.
“If you compare us to other jurisdictions that are focusing on mining, then that’s why you see that we may have challenges that we may want to address.”
He, however, pointed out that the industry continues to play a critical role in stabilising the economy.
“One of the things that we visibly can tell is the currency and its performance recently, and everybody knows that a big chunk of that is attributable to the gold industry,” he said.
The Chamber, he added, is working closely with government to find solutions and support key interventions such as the gold purchase programme.