The Director General of the Securities Exchange Commission (SEC), Rev. Daniel Ogbarmey Tetteh has intimated that for the local mining industry to fully harness its potential, it should resort to long-term capital which can be realised from the stock market.
The business of minerals exploration and exploitation is undoubtedly “a capital-intensive industry, and needless to say it is not sustainable to use bank loans to undertake mining. It has taken patient capital throughout the world to undertake exploration and actual mining. All over the world, capital markets have provided capital for a successful mining industry,” Rev. Tetteh mentioned.
The Director General of SEC further asserted that delving into the history of stock market development in mining countries one can say that mining activities go hand-in-hand with the stock markets adding that the Johannesburg Stock Exchange and Australian Stock Exchange for example were started by mining firms with the aim of raising long-term capital to undertake mining operations.
Today, the Johannesburg Stock Exchange boasts not less than 60 listed mining firms, while the Australian Stock Exchange has over 613 mining and metal companies listed on it.
“This shows how these two countries, endowed with minerals such as gold just as Ghana, have taken advantage of their stock markets to raise capital to enter into large-scale gold mining. It is interesting to note the majority of these companies started small and grew to become multinational in scope and size, generating huge amounts of wealth for their countries’ GDP,” he remarked
Rev. Tetteh, however, whined that this is not the case when it comes to Ghana. Even though the country remains one of Africa’s leading gold producer, there are only two listed mining firms on the local bourse even after 30 years of its existence.
This needs to change quickly, he opined because it shows the industry is not making use of the great opportunities which the capital market offers mining companies to scale-up their operations so “I am challenging our local miners and companies to explore the benefits of listing on the stock exchange to take the commanding height of mining in Ghana.
“The opportunity to raise capital from the stock exchange in Ghana is not limited to companies directly involved in mining, but also other firms in the ecosystem. For instance, all firms in the supply chain providing ancillary services to the industry can also raise capital from the stock market,” he said.
Touching on the value addition to the economy, Rev. Tetteh stressed that the only way the country can reap full benefits from its mineral resources is to “discipline our minds to develop a fully integrated industry: ranging from mining the raw ore, processing, refining and a comprehensive jewellery and fashion industry” in which Ghanaians shall be at the helm of affairs.
Going further, the principle and concept of generational equity demands that the present generation should have in mind the next generation’s interests with regard to the country’s resources, as this is a cornerstone of every responsible society that depends on natural resources which are bound to get depleted in the course of time, he advised.
“As a natural resource it can become exhausted after years of exploitation. Therefore, optimising the mineral reserves that nature has endowed Ghana with for sustainable economic development is non-negotiable”.