ACEP Warns of Legal Repercussions in Government’s Move to Reclaim Damang Gold Mine
Ghana’s government is under growing pressure to justify its decision not to renew the mining lease of Abosso Goldfields Limited (AGL), a subsidiary of the South African mining giant Gold Fields, as concerns mount over legal risks, investor confidence, and adherence to due process.
In a sharply worded statement released Thursday, the Africa Centre for Energy Policy (ACEP) challenged the legal and procedural basis of the state’s move to assume control of the Damang mine after the expiration of AGL’s lease on April 18.
Citing provisions of Ghana’s Minerals and Mining Act, the think tank warned that the government’s actions could trigger costly litigation and further erode the country’s investment climate.
“The state’s decision to take over the mine is premature,” said ACEP Executive Director Benjamin Boakye, arguing that under Section 27(5) of the Act, AGL is entitled to continued operation of the mine pending arbitration, a right the company has formally invoked.
“Ghana has been bruised too often by hasty decisions,” Mr Boakye said.
The controversy follows the Minerals Commission’s recommendation that the lease not be renewed, citing operational lapses including suspension of active mining, failure to declare mineral reserves, lack of a technical programme, and insufficient budget for exploration.
But ACEP countered that these justifications lacked legal grounding and transparency, warning against what it sees as a policy shift toward de facto nationalisation of mining assets.
“Stockpile processing is a legitimate operational phase, not a breach,” the statement said, referencing the 135,000 ounces of gold produced in 2024 from previously mined ore.
ACEP further insisted that AGL had submitted required technical and exploration reports, which it says should be independently verified rather than dismissed.
The Damang mine, operated by AGL for over 30 years, has in recent years become less central to Gold Fields’ strategy as the company evaluates its economic viability.
However, the think tank argued that the government’s interpretation of the mine’s reserve status was misleading and that the use of Mineral Reserves Economic Criteria (MREC) as justification for expropriation ignored the complexity of such assessments, which are subject to changing economic variables.
The development evokes memories of earlier high-profile disputes in Ghana’s energy and extractives sector, including the cancelled Agyapa royalties deal and the Ameri power renegotiation, which triggered public backlash and financial penalties.
“These decisions have escalated into costly outcomes for the state,” ACEP noted.
Beyond legal questions, the timing and lack of communication around the lease termination have drawn criticism. Despite indicating plans for a forensic audit of AGL, the Minerals Commission has not followed through, further clouding the credibility of the process.
If the government is indeed pursuing a broader policy of resource nationalisation, ACEP warned, it must communicate this clearly to avoid investor alarm and industry uncertainty reminiscent of Ghana’s troubled mining past in the 1970s.
“The government needs to exercise restraint, renew dialogue, and pursue a legally guided resolution,” Mr Boakye urged.
