Ghana’s newly discovered iron ore has the potential to boost the country’s metal sector and support other sectors including the automotive industry.
The discovery has implications for revenue generation and the country’s GDP growth as price of the commodity has in recent times seen a massive rise on the global commodities market. Potentially, this would reduce the growing importation of the metal into the country as this new ore find presents an opportunity to meet local manufacturing demand.
According to 2019 figures, Ghana was the 67th largest exporter of iron ore in the world and at the same time the 124th largest importer of the metal in the world at the same year. Ghana exported $51.88 million of iron and steel, per the United Nations COMTRADE database on international trade in 2019.
The transition away from carbon intensive fossil fuels to renewable energies is increasing the demand for metals including iron ore which bodes well for the future of the metals sector. Rising imports by the world’s top consumer, China for its manufacturing industry could be well considered as a tailwind for the commodity’s upward trajectory in recent times. Analysts are of the view that the market is somewhat positioning for a rebound in steel demand in the first half of 2022.
Steel which is made from iron ore holds potential for the country’s metal industry and this discovery looks promising for the sector. In 2020, the International Finance Corporation (IFC) provided a $12 million loan facility to Rider Iron and Steel Ghana Limited for the construction of a steel manufacturing plant. The facility which is anticipated to be completed in 2021 will increase Ghana’s steel production by 75 percent.
Automotive Industry to Benefit from Iron Ore Discovery
The country’s nascent automotive industry in the past few years has experienced major growth from the influx of automotive giants such as Volkswagen, China’s state-owned Sinotruck, Toyota and Nissan which have begun car assembling plants in the country. Thus, with this discovery, the auto industry is provided with readily available locally sourced metals in required quantities.
According to the Ghana Geological Survey Authority, the iron ore discovery is of 55.22 percent ferrous content. Meanwhile, this grade of iron ore is a baser grade, below the 65 percent ferrous content standard considered as a higher-grade on the world market. As such, mining analysts have indicated that the government should be measured in its optimism so as to avoid raising the expectations of the host community too highly.
Mr Henry Antwi, an Australian-based Mining and Mineral Economics consultant, is cited to have said that:
“We should be careful not to raise the expectations of host communities too high with such preliminary finds and sketchy information. First of all, 56% is a low iron ore content by the standards of iron ore seaborne trade, but of significance is the high contaminant levels in Ghana’s iron ore (i.e the silica, phosphorus, alumina, etc).
“What are the mining and processing parameters to determine if it is even economically viable (stripping ratio, recoveries, etc)? We have to be certain that the discovery is economically viable before making promises to the mineral host communities, so in the event, it is not economically viable, and exploitation delays, the communities will not conclude that it was only a political announcement to win their votes.”
Henry Antwi, Mining and Minerals Consultant
Beyond this, taking advantage of the discovery of the metal should not be treated as business as usual. Given the potential of the metal in manufacturing amid the ongoing energy transition, the country should be moving towards value addition in order to break away from the existing cycle where the full benefits from the metal are not realized.
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