Ghana Signs USD 10 Bil Bauxite Exploration Deal with China

Ghana Signs USD 10 Bil Bauxite Exploration Deal with China

August 16, 2017

In order to exploit its vast natural resources, Ghana enlists China to provide funds and the technology for mineral exploration and mining in the region.

By Jagdish Kumar

Ghana has signed a USD 10 billion bauxite exploration deal with the Government of China. Under the Memorandum of Understanding (MoU) China has agreed to design and construct a bauxite mine in the Ghana.

The MoU was signed by Ghanaian Vice President Mahamudu Bawumia, who recently completed his four-day visit to China to explore business co-operation and opportunities between the two nations.

Apart from developing the mine, China will also construct a 1,400 km railway network to transport the mined bauxite.

Speaking on this, Ghana’s Senior Government Minister Yaw Osafo-Maafo says that to develop the mining project, Ghana needed the USD 10 billion and China was the right country to provide not only the funds, but the requisite technology to convert mined bauxite into aluminum.

According to an official statement, the funds will be released by the China Development Bank (CDB), whereas the construction of the railway line and other infrastructure projects will be undertaken by other Chinese firms along with selected local partners.

China has been expanding its operations in West Africa by announcing huge investment programs in various big tickets infrastructure project across the region.

The railway network will not only transport mined resources, but it will also be used for other railway activities. China will not only build 1,400 kms of railway line but will build a further 4,000 kms line that will connect the bauxite mines and production sites as well as establish a rail link into the neighbouring country, Burkina Faso.

Business analysts believe that the deal is the latest to-date in the highly diversified investment portfolio of China in Africa, which spans construction, mining, agriculture, and manufacturing.

At the time when the economy is sluggish on falling commodity prices and amid weak investor confidence, the investment plan by China has given Ghana a much-needed boost. Osafo-Maafo says the investment deal will improve infrastructure and increase employment in the country.

According to U.S. Geological Survey, Ghana has an estimated 960 million metric tons of bauxite deposits and currently produces only 827,000 tonnes of bauxite and 40,000 tonnes of aluminum.

With the new bauxite plant, Ghana is expected to earn around USD 460 billion from exporting refined bauxite in the coming years.

Another Chinese company, energy firm Sinohydro Corporation Limited has also signed a MoU deal with the Ghana Government for construction of a hydro plant, along with other projects totalling USD 4 billion.

Under the MoU, Sinohydro will undertake projects including a multi-purpose hydro at Pwalugu, a Volta Lake Transportation, an Accra Flood Prevention, as well as other priority infrastructure projects including garbage treatment plants, solar power plants, and rail.

During the trip to China, Ghana’s Minister secured a commitment of USD 19 billion from China, of which USD 10 billion will be for the construction of the bauxite plant, USD 4 billion for construction of a hydro plant and USD 2 billion will be for One District One Factory program.

Of the balance USD, 3 billion has been proposed for future, CDB has agreed to loan USD 2 billion in a grant with lower interest rates with an extended maturity, whereas, China Exim Bank is committed to providing about one billion dollars to Exim Bank Ghana to support infrastructure and business development.

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