The Royal Ghana Gold Refinery aims to secure coveted international certification and position the nation as Africa’s leading gold hub, marking a major leap in the country’s quest for economic transformation and additional value to its mineral sector.

The state-of-the-art facility, which aspires to achieve London Bullion Market Association (LBMA) certification, marks a pivotal moment for Ghana, currently the leading gold producer on the continent.

Vice President Mahamudu Bawumia said: “We celebrate not just a new facility but a testimony to our government’s commitment to adding value to our natural resources, creating jobs, and ensuring sustainable economic growth.”

The Royal Ghana Gold Refinery, a partnership between Rosy Royal Minerals of India and Ghana’s central bank, is designed to refine up to 400kg of gold daily. The refinery sources its raw material mainly from artisanal and small-scale mines, which account for about a third of Ghana’s annual output of approximately four million ounces.

This venture represents a strategic investment in the country’s future, with the potential to transform Ghana from a raw gold exporter into a hub for refined gold on the international market.

“Historically, Ghana has exported its gold in raw form, missing out on significant revenue and job creation opportunities,” Bawumia said. “With the ability to locally refine our gold, we will be able to sell it at its appropriate price, retaining its economic value within our borders while creating numerous job opportunities for our youth.”

Refining Ghana’s gold to sell at premium prices

Ghana’s gold exports have been a major contributor to the country’s economy, accounting for 54% of total exports in the first half of 2024, with earnings amounting to $5bn out of $9.2bn in total exports, according to data from the central bank. The surge in gold prices, particularly in the second quarter of 2024, significantly contributed to this boom.

The average gold price reached a record $2,338 an ounce, an 18% year-on-year increase, and further spiked to an all-time high of $2,482 an ounce in July 2024.

Small-scale mining played a crucial role in this export surge, contributing approximately $1.7bn, or about 36%, of mid-year gold exports.

The new refinery is expected to bolster this sector by providing a local facility that meets international standards, ensuring that more of Ghana’s gold is refined and sold at premium prices.

The Royal Ghana Gold Refinery, situated in the capital Accra, is projected to create between 80 to 120 direct jobs and an additional 500 indirect jobs, further boosting domestic tax revenue through corporate taxes.

The facility’s capacity to refine gold to 24-carat purity, equivalent to 99.99%, places it on par with international standards, enhancing the country’s ability to compete in the global market.

Bawumia said the government’s vision is to make Ghana the gold hub of Africa, positioning the refinery as a critical player in this ambition.

Challenges from ‘galamsey‘: illegal mining

However, the path to realising the full potential of this refinery is not without challenges. Illegal small-scale mining, known locally as ‘galamsey’, has been a persistent problem in Ghana, leading to severe environmental degradation.

The current issues of illegal mining pose a big threat to our value addition efforts

Official records say illegal mining has devastated 34 forest reserves, resulting in the destruction of 4,726 hectares of forest. The environmental impact of galamsey not only threatens Ghana’s natural resources but also jeopardises the refinery’s ability to meet the LBMA’s responsible sourcing requirements.

“The current issues of illegal mining pose a big threat to our value addition efforts as it has the potential of tainting the gold that will be fed into the refinery, making it difficult to meet international certification standards,” the vice president said. He called for a concerted effort to address the galamsey menace through practical policies and enhanced enforcement of mining regulations.

Next milestone: LBMA accreditation 

Ghana, formerly known as the Gold Coast, will now shift focus on obtaining the coveted London Bullion Market Association (LBMA) Good Delivery accreditation, which would make the Royal Ghana Gold Refinery only the second in Africa to achieve this status, after South Africa. The Bank of Ghana, which has a 20% stake in the refinery, is keen on fast-tracking this process.

Governor Ernest Addison said the LBMA accreditation would allow the bank to “diversify and organically grow its foreign exchange reserves and accumulate more gold reserves to reduce dependence on external borrowing”.

For his part, Natural Resources Minister Samuel Abu Jinapor touched on the broader impact of Ghana’s mineral wealth on economic transformation, noting the ongoing $450m project by the Ghana Manganese Company to upgrade its refinery and create additional jobs.

“This initiative, along with the Royal Ghana Gold Refinery, is part of our broader strategy to harness our mineral resources for the benefit of all Ghanaians,” Jinapor tells The Africa Report.

Ghana, Burkina Faso, Mali….

As Ghana takes a decisive step forward with the opening of a gold refinery after centuries of mining the precious metal, it joins a broader regional movement in West Africa to add value to its mineral wealth.

In 2023, Burkina Faso laid the foundation for its own national gold refinery, with hopes of completing the project by the end of this year. Meanwhile, Mali has signed an agreement with Russia to build a gold refinery in Bamako.