Ghana Rejects Gold Fields' Damang Mine Lease Renewal, Grants 12-Month Extension

Gold Fields, a prominent gold producer, has announced that its application to extend the mining lease for its Damang gold mine in Ghana has been initially rejected by the government. However, the company will be granted a 12-month lease to continue operations, as stated in a Thursday release. Gold Fields plans to "take all reasonable measures" to restart the open-pit mining operations at Damang, which were suspended in 2023. The subsidiary owning the asset will be permitted to resume processing surface stockpiles.

The Ghanaian government, under the leadership of President John Mahama since January, has taken the unusual step of rejecting the renewal of the lease. The government cited that Gold Fields' application did not report mineral reserves, outline future plans, or allocate any exploration budget for Damang. On April 15, just three days before the mining license was set to expire, the country's Ministry of Lands and Natural Resources stated that this reflected the new government's shift away from the "automatic renewal of permits" colonial mindset.

According to a solution first announced by the presidency on Wednesday, Gold Fields will complete research to extend the life of Damang by the end of the year. The company also stated that a joint working group will be established between the mining company and the government to "ensure a smooth transition of the asset to the people of Ghana."

Governments across Africa are pushing to gain more benefits from their natural resources. This year's record surge in gold prices has particularly highlighted the industry's focus. Meanwhile, the rise in gold prices has prompted some major producers to sell smaller mines that lack new investment and are nearing the end of their lifecycle. China's Zijin Mining Group acquired the Akyem project in Ghana from Newmont for $1 billion, while Barrick Gold is seeking a buyer for its Tongon asset in Côte d'Ivoire. Gold Fields had previously indicated that it was considering divesting the Damang mine.

Damang is a mature asset, accounting for approximately 6% of Gold Fields' total production last year. The one-year extension requires approval from the Ghanaian parliament, which is set to reconvene next month. The company also operates the larger Tarkwa mine in Ghana and hopes to merge it with AngloGold Ashanti Ltd.'s Iduapriem asset. The two companies were unable to secure merger approval during the term of the previous government, which was voted out in December.

According to the presidential statement, Gold Fields and the government have agreed to initiate negotiations on the renewal of the Tarkwa mine lease, which expires in 2027. Ghana is not the only gold-producing country in West Africa taking a harder stance on resource assets. The military government in Mali has been renegotiating mining agreements with investors and threatening to take over Barrick's massive Loulo-Gounkoto mine, which has been closed for three months due to revenue-sharing and alleged tax disputes. Burkina Faso nationalized two small gold mining operations last year, Côte d'Ivoire is revising its mining regulations, and Senegal has begun reviewing existing contracts.