A Technical and Economic Advisor at the Office of the Vice President, Dr. Mutaka Alolo has hinted that the commercial mining of bauxite as part of the $2 billion Sinohydro deal will start next year.
He said active work is being done by the government especially through the Ghana Integrated Aluminium Development Corporation (GIADEC) to secure appropriate investment that will help the country generate enough from the bauxite and pay back the loan secured from China’s Sinohydro.
This announcement comes at a time when Some Civil Society Organizations have increased awareness on the need for the country to desist from mining bauxite in, particularly, the Atewa enclave which is one of the three areas earmarked to be exploited for the bauxite ore.
But speaking on Point of View on Monday, Dr. Alolo, said the government was holding consultative meetings with the various stakeholders to listen and address their respective concerns with regards to the planned bauxite mining.
While stressing that plans had still not been concluded on the potential sources of revenue to pay back at least the first tranche of the $2 billion, Dr. Alolo said some international companies have already put in bids to play a key role within the value chain of the project.
He however indicated that by the end of the first quarter of 2020, the government will be better placed in announcing definitely, from what sources it could raise revenue to pay back the loan.
“I can tell you that by January and February, we can have clear picture of all the lines of investment. This is like an international competition process that is going on. About 40 international companies have put in bids and have been shortlisted to 16. By the time the process is over, we will know whether we are having either two refineries or two smelters. There is a possibility that there will be another smelter in addition to VALCO so there will be another revenue source from that as well. And we also have the refinery that if it comes on stream, there will be a revenue source and we have the bauxite itself at the minimum if none of these accrues [anything],” he said.
There have been suggestions that the government may not be able to generate adequate returns from its investments with Chinese money to pay back the loan.
The African Centre for Energy Policy (ACEP) in a research paper last month cast doubts about the country’s ability to honour its commitments regarding the barter agreement with China if it relies solely on revenue from the proposed Integrated Aluminum Industry.
ACEP, after considering current benchmark values and the proposed plan of activity for the bauxite mining process said the repayment plan may not play out as the government expects.
But Dr. Alolo indicated that the government was considering various streams of income within the value chain of bauxite mining including an operating bauxite refinery and smelting of the bauxite to generate enough revenues.
“We have different streams of income. If the refinery is not even in place, we have Valco and we have the mining. The mining can start in the next couple of months but it will definitely start next year, so as the refinery. We have these revenue streams coming from various sources and that is why we have structured the transaction in such a way that it will be done in phases,” he said.
Parliament in July 2017 approved the Master Support agreement between Ghana and Sinohydro Corporation Limited for the construction of priority infrastructure projects to be serviced with refined bauxite.
Some of such projects including the Tamale Interchange Project have already commenced.
The government is expected to repay the money at a 2.8% interest rate.