Talking Drums

The West African News Magazine

A hill of bauxite, a web of contracts

Poku Adaa

The recently announced offer by the Soviet Union to carry out feasibility studies on the Kyebi Bauxite deposits in Ghana is yet again one more spoke out of the wheel of negotiations, contracts, studies, etc, on this particular project. From our Correspondent, Poku Adaa, we present this feature.
Towards the latter part of August, this year, a four-man Ghanaian delegation led by Secretary for Finance & Economic Planning, Dr Kwesi Botchway returned from the Soviet Union to report to the nation that the USSR has agreed to carry out feasibility studies on the Kyebi Bauxite deposits. Welcome though this piece of news may appear to be, it is yet again one more spoke out of a revolutions wheel of and negotiation. Contracts that have bedevilled this national resource for many many years. The only difference this time is that the Soviet Union is attempting to enter the web of intrigue surrounding the project which has been wound tight by Western financiers and multinationals.

The Kyebi deposits lie in the heart of East Akyem Abuakwa nearly 60 miles. northwest of Accra in the range of hills stretching from Wirenkyirem Amanfrom, through Apapam, encircling Kyebi township itself and then onto Sagyimase and Asiakwa eight miles away.

The bauxite deposits were discovered in 1914 by the Geological Survey Department of the Gold Coast led by Albert Ditson. The attitude of the colonial government was simply 'acquire the land but do nothing meanwhile'. Thus the British Aluminium Company (BAC) became "owners" of the deposits and this consequently passed into the hands of Reynolds Metals Co when it acquired BAC interest in later years. Although President Kwame Nkrumah decided to take control of bauxite concessions in the country in 1958/59 he could not 'touch' the Kyebi deposits, as then it was firmly under the control of the Aluminium monopoly giants of Reynolds and Kaiser, who saw a real threat to their international corporate strategy and stranglehold on the world aluminium industry, if developing countries such as Ghana were to proceed with real production of Alumina.

However after several intervening years, in 1972 actually, an Aluminium Industries Commission (AIC) was set up in Ghana "for the purpose of developing the aluminium industry in Ghana and more especially to assume responsibility for the development of the Kyebi Alumina Project. Seeing that it could not develop the industry of even talk about the Kyebi deposits without facing the ubiquitous monopoly giants again the AIC negotiated with their creation, BASCOL (Bauxite Alumina Study Company Ltd). BASCOL was a consortium comprising Kaiser, Reynolds metals and five Japanese Companies (Nippon Light Metal, Showas Electric, Mitsui Aluminium, Mitsubishi and Sumimoto chemicals).

BASCOL thus set down to work and managed to produce a feasibility report in 1975 which called for a proposed project, with a capacity to produce 600,000 tons of alumina, two thirds of which would be bought by Kaiser and one third by the Japanese team. While the AIC wished the plant to be sited at the mine site at Kyebi, the American group wanted it at Tema. This difference was worsened by Kaiser's decisions to expand operations and increase power consumption at its Valco plant, thus stiffling the availability of power needed for the development of the Kyebi bauxite deposits. (Consequently, the Japanese lost interest and withdrew followed by Valco aluminium production line: duty free importation of alumina.

Reynolds when it came to light that Kaiser had stockpiled alumina enough to make a new investment in Ghana 'useless' at the time. BASCOL collapsed and disintegrated in 1975 eventually.

In 1981, the Ghana government re-opened the files on the Kyebi Bauxite deposits. A new international consortium was approached for talks. The consortium, made up of Messrs Root & Brown Inc of the USA, Banker Jamaica. Trust of the UK, Granges International Mining AS of Sweden and the Swiss company Allu Suisse agreed to sign an agreement with the Ghana government to study again and update previous studies on the project and to prepare an economic analysis and plans for the development of the project.

Six months later, the coup of 31st December 1981 came and the files were closed once again... for two years.

In mid 1983, the Ghana government voted nearly half a million US dollars to conduct its own feasibility studies, under the auspices of the ecological survey department, to assess the viability of an 800,000 tonnes capacity alumina plant at Sagyimase near the mining site at Kyebi. The Government once more had no choice other than to invite the same monopoly giants to become their partners.

A year later, the wheel of bauxite has touched the court of the Soviet Union which had offered to begin its own brand of feasibility studies on the project. How the erstwhile western corporate giants will react to this apparent encroachment on their 'domain' remains to be seen - a ping pong ball being played on a hill of bauxite deep inside Ghana's hinterland.

The two main factors that have held up development of the Kyebi deposits is whether a completely new smelter should be built to service the bauxite mine or whether the raw oxide should be used to feed the existing Valco Smelter at Tema. The first alternative which was favoured by the Japanese team within BASCOL in 1974-75 was stiffled due to unavailability of power. The second alternative is clearly subject to the consent of the owners of Valco Smelter. It needs to be recalled that Kaiser feeds its Valco Smelter with imports from its operations in Jamaica.

Thus, any attempt to feed Valco from a local mine such as at Kyebi will be like punching a hole into the tight knit web of Kaisers worldwide aluminium strategy and such a move will not be easy to attain.

The much lauded re-negotiation of Valco agreements did not emphatically open the way for an unhindered and unconditional development of the Kyebi bauxite deposits and independent local production of alumina. The agreement signed on July 10, 1984 said, inter alia, "TO ENCOURAGE VALCO to use locally produced alumina if and when such is available at competitive prices (caps mine) and in commercial quantities and if should that happen, importation of alumina will cease to be duty free..." Now, this is a clear example of dust-blowing into peoples' eyes because the RENEGOTIATED (caps mine) agreement did NOT open any avenue whatsoever for Valco to smelt bauxite from Kyebi or anywhere in Ghana. In fact, until Ghana gets sufficient power and finance and capability to build a NEW smelter which will produce alumina in commercial quantities (how much will Valco consider adequate commercially?) to be SOLD CHEAPLY to Valco (competitive prices?), then Valco will continue to enjoy duty free importation of alumina.

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