The Institute of Economic Affairs (IEA) has called for significant constitutional amendments to safeguard the nation’s natural resources.

The proposals come in response to the reported US$1billion sale of Newmont’s Akyem gold mine to China’s Zijin Mining Group, a deal IEA describes as “flawed in several respects, inimical to Ghana’s interest and unacceptable”.

In a press release dated October 21, 2024, IEA outlined two key proposals aimed at reforming resource governance and reducing corruption.

First, they suggest amending Article 257(6) of the Constitution which currently vests Ghana’s natural resources in the president.

The IEA argues that: “The natural resources should rather be vested in the state and every contract should require parliamentary ratification as per Article 268(1) of the Constitution”.

Secondly, the think-tank proposes introducing a provision that prohibits the state from signing contracts above a specified monetary threshold less than six months to the end of their four-year term.

This measure, they contend, would prevent incumbent administrations from signing “eleventh-hour contracts in favour of their families, friends or cohorts, or for personal gain”.

These proposals are part of a broader critique of the nation’s approach to managing its mineral wealth. The economic think-tank asserts that the country cannot afford to continue to “sell its birthright cheaply to foreign companies – as it has been doing its entire history – only to descend on the companies’ capitals to beg for aid”.

Regarding the Akyem gold mine sale, IEA raises several concerns about the transaction’s legality and economic implications.

They note that with the current lease agreement between the government and Newmont expiring on January 19, 2025, any decision by latter to sell the mine must be on a transfer basis and must be for the unexpired term only and subject to the government agreement.

“According to the terms, the lease is transferable within the duration period, subject to mutual agreement between government and Newmont. The lease is also subject to extension after its expiry date, by mutual agreement.

The lease has not yet expired, and therefore any decision by Newmont to sell the mine must be on a transfer basis and must be for the unexpired term only and subject to government agreement.

“At the end of the expiry period, Newmont is obliged to hand over the mine back to government, the truthful owner of the gold under the assigned land. Any company that wants to operate the mine after the lease’s expiry date must sign a new agreement with government,” it explained.

The think-tank claims to be unaware of any such agreement between Newmont and government for transferring the mine to Zijin for the unexpired term of the lease.

“The IEA is also not aware if Newmont has evoked the extension clause or whether government has agreed to such an extension. IEA wishes to point out that apart from Newmont, no other company has an original locus or right in extension of the lease,” the IEA said.

Furthermore, they argue that allowing a foreign company to take over the mine contradicts President Nana Addo Dankwa Akufo-Addo’s earlier stance.

cited the president’s State of the Nation Address from eight months ago – February 2024 – when he stated: “We will engage with Newmont to give Ghanaian investors who want to acquire this mine priority, to ensure that our mineral resources better benefit the Ghanaian people”.

Economically, the IEA projects that the Akyem mine could yield annual revenues of approximately US$1.05billion, based on current production and gold prices. Given this estimate, they argue that the reported US$1billion sale price “would therefore substantially short-change the country”.

The think-tank draws parallels to international practices, noting that: “Even Canada, where Zijin is also seeking to invest in the critical domestic minerals sector, has decided to limit Zijin’s stake in the interest of Canadian national security”.

They urge the authorities to take a cue from Canada and similarly protect its national security and economic interests.

Addressing broader resource management issues, IEA emphasises that Ghana’s natural resources represent the low-hanging fruit for accelerating the country’s development and eradicating its endemic poverty.

They advocate a “complete paradigm-shift” in mineral contracts, suggesting that Ghana should consider negotiating more favourable production-sharing or service contracts instead of relying heavily on foreign investors.