Facts and figures available indicate that GoldBod may be recording as much as an estimated GHC3 billion in losses within its first year of operation under the new gold aggregation and export regime.
So far, checks made suggest that GoldBod is estimated to be losing an average of GHC8,000 per ounce of gold (approximately $25,900 per kilogram). This includes the logistics cost, the assay difference, and the FX fluctuation.
This does not mitigate the fact that GoldBod’s introduction has been hailed as structurally positive for Ghana’s management of its mineral resources.
GoldBod was established to, among other things, purchase all gold produced by small-scale miners through appointed agents and with the exclusive mandate to sell it to the international market.
Under the current structure, Alhaji Bawa, the licensed national aggregator, has the mandate to purchase all gold from Tier 2 traders, who in turn buy from Tier 1 operators at mining sites.
Bawa receives a fixed price from GoldBod, and GoldBod advances him the funds to purchase the gold, with repayment due within three days.
However, rapid fluctuations in international gold prices during these intervals are contributing significantly to the losses, our checks suggest.
The core challenge of gold optimization, according to insiders, is that GoldBod is buying gold entirely in cedis yet using the Bloomberg rate.
So far, the company has purchased 66 tonnes of gold from both unknown and verifiable sources, but only 6.6 tonnes have been added to Ghana’s reserves – a matter now under some scrutiny, with international NGOs demanding the annual sourcing report from GoldBod.
Dore assay differences
We are aware of the assay differences, where many of the local traders use water density assay methods instead of fire assay. These alleged losses are occurring despite record-high global gold prices and rising production levels locally.
Under the current policy, GoldBod is the exclusive buyer of gold from small-scale miners and can also take up to 20% of large-scale production when necessary.
This represents a significant departure from the previous Gold for Forex/Gold for Oil framework, under which the Bank of Ghana, working through the Precious Minerals Marketing Company (PMMC), purchased gold, albeit not as a monopoly.
Even though the Bank of Ghana has declared, in line with IMF directives, that it is no longer financing gold purchases, Asaase News understands that the central bank is still effectively supporting buying, albeit with the entire risk now concentrated rather than shared.
Industry experts warn that commodity trading, especially gold, requires a five-step framework for risk-based due diligence in the mineral supply chain, adapted specifically for gold, as well as sophisticated risk management and hedging, lessons painfully learned by Ashanti Goldfields decades ago. Without such hedging, price volatility can rapidly erode margins.
Though its establishment has been generally hailed as positive for helping the nation gain greater control of its resources, there are still teething issues, particularly with the volatility of trading.
There are also concerns over the sources of both the gold purchased, which many suspect are heavily involved in illegal mining, and the sources of funding, the main criterion for gold exports.
The alternative sourcing initiatives approved by many domestic gold purchase programmes, such as the World Gold Council, Responsible Jewellery Council, and LBMA, have clearly listed the criteria for obtaining local gold.
Thus, the guidance addresses risks such as corruption, money laundering, human rights abuses, and links to armed conflict and terrorist financing, which are particularly acute in the gold sector because of its complex and often anonymous nature.
Meanwhile, checks show that one of the chief objectives of GoldBod, reducing gold smuggling, has not fully materialized.
Previously, the PMMC licensed numerous private gold buyers and established refineries such as Sledge and Goldstream, which operated with Minerals Commission (MinCom) approvals to refine and export gold directly.
Today, however, MinCom is no longer issuing licences, consolidating control of the sector under the new policy.
As investigations continue, industry watchers are calling for a closer assessment of the operational model, its risks, and its impact on Ghana’s reserves.
They are also examining whether the monopoly structure is delivering its intended benefits and fulfilling the domestic purchase gold programs of central banks and metal trading agents, such as GoldBod.
