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ACCRA, GHANA – 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.
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