On a shaded patio off a large pink and yellow building in central Accra, Kweku Boohene, a Ghanaian goldsmith with a stubbly grey beard, is watching the glowing coals of his makeshift smelter turn to white ash.
A colleague has just melted down a bit of gold, poured it into an ingot mould and returned inside to a cluttered workshop where five of them usually shape the precious metal into rings and chains with hammers and rolling mills. But for now, there is only one person working. As Mr. Boohene stands there in sandals and a loose-fitting green shirt, two others lounge in patio chairs.
“I used to make 10 rings a day, but now it’s not even one,” said Mr. Boohene, a 35-year veteran in the jewellery business.
In Ghana, Africa’s second-largest gold producer, the yellow metal is big business: Gold currently accounts for about 40 per cent of export earnings. As global gold prices have plummeted – 26 per cent in the first half of 2013 alone – the small-scale miners who supply this workshop have stopped coming by to sell the gold dust and tiny nuggets dug out of Ghana’s red earth.
In the country’s gold belt, owners are now shutting mine sites, laying off workers, letting their expensive equipment sit idle and hoarding what gold they have bothered to dig up. Like Mr. Boohene, they are waiting for gold prices to rise again.
Kinross Gold Corp., which operates the Chirano mine site in southwestern Ghana and has been implementing cost-saving strategies since the second half of 2012, has laid off 325 contract workers in the country, while hiring just 140 full-time workers. “We’ve embarked on a company-wide, comprehensive cost review that affects all our operations, which includes our Chirano mine,” said Kinross spokesperson Louie Diaz.
The world’s mining giants, including Kinross, have slumped under billions of dollars in writedowns as gold prices plummeted from highs above $1,900 an ounce to lows around $1,180 in late June. Barrick Gold Corp., the world’s largest producer of the metal, announced writedowns totalling $8.7-billion on Aug. 1.
In Ghana, the implications of the gold market rout reach beyond dividends and investment portfolios.
The country saw phenomenal GDP growth of 7.9 per cent in 2012 partially because, like other African countries, it has ridden the commodities boom. That helped to attract investment and expand its services sector. New offshore oil discoveries have also started to fill the government’s coffers while providing thousands of highly skilled jobs. But the country is set to see per capita GDP growth of just 2.6 per cent in 2013, down from an earlier estimate of 4.8 per cent, because of softer commodity prices, according to a recent research note from emerging markets-focused investment bank Renaissance Capital.
All told, Mr. Boohene is lucky to have any work. Indeed, Said El Mohamoud, the Lebanese-Ghanaian owner of the jewellery store where Mr. Boohene works, said the only thing stopping him from laying off most of his workers is that he thinks they would not be able to find other work. “Normally, this place would be full up,” Mr. Mohamoud said in his empty shop.
In the country’s mining heartland around Kumasi, the ancient capital of the gold-trading Ashanti empire, many miners now owe money for equipment bought during the boom times. Isaac Kotey, a small scale mining entrepreneur, said he has laid off about 30 workers and shut down four of his six mines in the region. His two remaining sites, 25-acre open pits of mud and rock where unskilled workers stand barefoot in sludge, are operating at diminished capacity. Four of his eight excavators are now idle and security services have confiscated some equipment.
“Gold prices went down and diesel prices went up, so you’re losing,” Mr. Kotey said. “It’s very difficult.”
Toni Aubynn, the chief executive of the Ghana Chamber of Mines, said there have been at least a thousand job cuts in Ghana. And the country’s overall gold production is likely to fall 20 per cent in 2013, Mr. Aubynn added, drastically reducing the government’s expected revenues from the industry.
“Almost all the gold companies are going through job cuts at the moment. And many are reviewing their projects, trying to focus on quick returns, areas where they can actually get some margin,” Mr. Aubynn said. “It’s a blessing and a curse at the same time. Africa’s growth has largely been on the back of commodities. But it puts us in a very risky situation where, in the result of a slump of prices, we are very vulnerable.”
In Accra’s crowded neighbourhood of small-time gold buyers, far from the billion dollar deals and writedowns, all of that international turmoil translates into long, slow afternoons at Cabest Jewelry, a small store with dirty pink walls and a bare light bulb hanging from the ceiling.
“They usually bring it like this,” said clerk Gyamfi Boateng, as he removes a small, grey film container from a six-foot high safe and empties some gold nuggets into his palm. “Now, most of the miners are out of work. Things have slowed down totally.”
But Mr. Kotey, sitting in the store’s small lobby, expressed some optimism. Gold has gained recently, which is why he has just sold some. He stuffed the equivalent of about $7,000 (U.S.) into a fanny pack – a fraction of the $50,000 hauls he would bring in during gold’s heyday – and then got back into the driver’s seat of his dirt-smeared Toyota Hilux pickup truck parked outside.
“Now it’s climbing up – as of today, the price is good,” Mr. Kotey shrugged. “It rises and it falls.”