SIGL as the Special Purpose Vehicle to boost Program Development
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SIGL started its operations in 2006 mainly as a free zone enclave in Accra solely buying, smelting, assaying and exporting unrefined gold under a twice a week revolving US$ 2.5 million Credit Facility. Despite other License Rights the Company, could not promptly implement and develop the rest of its authorized business or activities such as Production of Jewelry, Lease of Equipment for sustained and increased production to allow the development of a World Class size gold Refinery in Ghana.
Coupled with certain inter-personal challenges among its past shareholders, activities stalled barely after 1½ years of operations, and the Company was later sold to its Development & Management Consultant who decided to identify strategic investor partner(s) with whom to implement a Comprehensive & Integrated Business Program, in line with the initial core plans for which SIGL was first incorporated and duly licensed for by Ghana Government to implement. As within this Comprehensive Business Development Plan, SIGL considers organizations such as local small refinery owners such as Gold Coast Refinery, AA Minerals, ASAP VASA, Gold Exporters Association the Ghana Chamber of Mines, the Ghana Mines Workers Unions, and Cooperatives, and Concessions Owners Associations, as potential strategic partners to be consulted and consolidate partnerships or alliances with, before considering presenting pre-identified foreign technology and potential shareholders to the Ministry and the Minerals Commission for resumption of smooth implementation.
2.2 Sector Market Linkage and Capacity Requirements
The industry can produce linkage effects with other sectors of the economy. Backward linkages with some local industries are already in place, and it is important for more links to be established for the domestic production of more mining and processing machinery, transportation and housing facilities, and constant research into new suitable processing and latest techniques. Forward linkages can be strengthened by the expansion of the local jewelry and related industries. The decision of the Precious Minerals Marketing Company (PMMC) to extend its operations into gold refining and jewelry production is therefore a step in the right direction. Similarly, it is for the good of the industry that another buying company particularly with higher gold refinery quality capacity be established.
2.3 Needed Sector Industry Capacity Solutions
In 1993, four years after the passage of the Small-scale Mining Law, an evaluation of the sector’s performance by Kwame Asante and Associates for the Minerals Commission, indicated that lack of working capital and credit facilities, lack of suitable mining equipment and inappropriate wages were the major problems affecting the industry. Others were, inadequate prices for produce and insufficient buying centers and agents (Anon, 1993). To a large extent some of the problems such as insufficient buying centers and agents, inadequate prices for produce and inappropriate wages have been solved. Those that still deserve attention are issues of working capital, credit facilities and modern equipment with best management practices. The problem of acquisition of credit facilities by the miners was tackled to some extent by the Minerals Commission, when with assistance from GTZ it put in place a hire-purchase scheme for the miners in 1992. However, this laudable program had to be discontinued when beneficiary miners did not pay back their loans, due to lack of control, and lack of managerial capacity building training.
Updates of the GTZ studies as conducted recently by our sister company Messrs. Cabinet Kpodar, leave us with astonishingly high figures on the cost benefit analyses, due to lack of responsible best practice in Ghana’s gold mining with US$ 3 to 4 billion lost to illicit mining, US$ 17 billion lost to lack of an integrated industry of value additions, and US$ 32 billion lost for lack of technology, skills and capital investment for optimum capacity development and maximization. The total loss amounts to a staggering US$ 53 billion.
It has largely also be found on the ground that various political and socio-economic interest blocs or countries do not necessarily or automatically have comparative advantage in terms of best required input at each stage of the development or operations process. It should be therefore far prudent that the sector’s full capacity development be done by avoiding concentrating or accepting assistance from one single donor country or socio-political or economic interest group. Donor bilateral and multilateral assistance should be welcomed solely under the framework of SIGL as PPP special propose vehicle and for efficient utilization.
THE PROJECT DELIVERABLES
World Market consumption of gold today stands at about 50% Jewelry, 40% Investments and 10%
Industry, with China and India being the World’s largest consumers (45% estimated at about 1584 tons) every year, mostly of jewelry in India and partly as investment and industrial input in China. The rest of the consumer market is mainly Europe, North America and the Middle East.
Owing to this world gold market trend, coupled with the urgent need to address the worrying issues regarding Artisanal Small Scale Mining especially in Sub-Saharan Africa, SIGL developed a business model which uses the Global supply chain concept to maximize returns on investment along the entire chain of the gold and minerals industry.
With its pre-identified Strategic Partners mainly from China, India, mainly Europe, North America and the Middle East, SIGL shall therefore maintain its initially planned marketing strategy to reach each of these world market segments, which will control supply and drastically increase and diversify production in the Artisanal, Small & Medium Scale Mining (ASM) through the immediate implementation of its well-researched and so far well tested Small Scale Mining Support Program. This strategy will feed the Refinery, initiating at the same time the manufacture of World Class Quality Jewelry for higher value addition to raw materials in Ashanti, Central and Western Regions, the first phase to be completed within 2 years and the rest within 4 to 5 years.
3.1 ECONOMIC BENEFIT TO STATE
The Duty Free enclave will attract manufacturing and other business enterprises that will also create
jobs and generate increased revenue for all stakeholders. The SIGL Gold City Refinery, jewelry production and marketing center, combined with the SIGL Mining Support Program for small and medium scale miners is estimated to create between 1.8 and 2 million direct and indirect extra jobs in the mining regions, and about 180,000 to 200,000 in the Gold City and its environs, resulting in a drastic increase from about 10% presently to about 50% quota contribution to GDP over the next five years, if properly and efficiently implemented.